RE SILVER BASE GROUP HOLDINGS LTD

HCCW 385/2021

[2022] HKCFI 1241

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 385 OF 2021

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D E C I S I O N

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1.  On 21 October 2021 Wang Jianfei presented a petition to wind up the Company. Mr Wang is a Chinese citizen and lives in Ningbo in Zhejiang Province. The Company is incorporated in the Cayman Islands and listed on the Main Board of the Stock Exchange of Hong Kong Limited. The Company operates in three business areas. It distributes baijiu, distributes cigarettes and invests in residential property. All these businesses as I understand it are conducted in China. The Company’s connection with the Cayman Islands is nominal.

2.  Restrictions on court proceedings in Hong Kong have delayed the Petition coming on before a judge. It came on before me today in the Monday morning call over list.

3.  It is not disputed that the Company owes the Petitioner the debt on which the Petition is founded or that the Company is insolvent. It appears that some months after the Petition was presented the Company took the following steps in the Cayman Islands. On 11 November 2021 the Company presented a winding up petition in the Cayman Islands and applied to appoint provisional liquidators. The application came on before Mr Justice Doyle on 22 November 2021, who adjourned the application to 8 December 2021, because he was concerned at the very short notice of the application given to creditors. On 8 December 2021 an order was made appointing Chan Pui Sze and Mak Hau Yin of Briscoe Wong Advisory Limited and Martin Trott of R&H Restructuring (Cayman) Ltd as soft-touch provisional liquidators leaving management of the business of the Company in the hands of the existing board: it is effectively a debtor in possession procedure. The Petition was adjourned until 11 February 2022 and adjourned again until 5 May 2022.

4.  It maybe that developments in the Cayman Islands alerted the Petitioner’s lawyers to the implications of the Company being incorporated in that jurisdiction. On 16 December 2021 the Petition was amended to assert matters that addressed the question, which the Petition in its original form did not, of how the three core requirements, as they are known, which need to be satisfied before the court will exercise jurisdiction over a foreign incorporated company, are met in the present case.

5.  It was not until 12 April 2022 that the Company issued a summons seeking leave to file evidence out of time and in opposition (seeking to adjourn the Petition). No explanation has been given for the delay, although I assume that it is connected with the progress of the proceedings in the Cayman Islands. The Company also takes the point for the first time in counsel’s skeleton that the second requirement is not satisfied in the present case.

6.  It is unsatisfactory that the Company has waited until shortly before the Petition is fixed to be heard by a judge before descending to produce evidence explaining that it is attempting a restructuring and raising an objection to the Petition. The matter is not helped by the fact that, I think it reasonable to assume, the Petitioner was not advised of the complications that arise if a winding up order is sought of a foreign incorporated company and has filed no substantive evidence that shows how the second requirement is satisfied. I will adjourn the Petition for substantive argument until 27 July 2022 at 10am.

7.  The Company has leave to file further evidence in opposition and updating the court on the progress of the restructuring by 4:30pm 6 July 2022 and the Petitioner has leave to file evidence in reply by 4:30pm on 15 July 2022. The Petitioner is to file a proposed draft directions and written submissions by 4:30pm on 19 July 2022 and the Company is to file a proposed draft directions and written submissions by 4:30pm on 22 July 2022. I will reserve costs.