RE JINRO (HK) INTERNATIONAL LTD

HCCW 1352/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 1352 OF 2001

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D E C I S I O N

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The application

1. This is an application by the petitioning creditors, Goldman Sachs International and Goldman Sachs (Asia) Finance (collectively "the petitioners") for the appointment of provisional liquidators to Jinro (H.K.) International Limited ("the Company"), pursuant to section 193 of the Companies Ordinance, Cap. 32. The timing of the application is somewhat unusual. It was made at an advanced stage after the substantive hearing of the winding up petition and is proposed in lieu of immediate liquidation of the Company. An application under section 193(1) and (2) may be made at any time after the presentation of the petition and before the making of the winding-up order.

2. The application arose in this way. Between 25 to 28 March 2003, I heard the petition to wind up the Company. Judgment was reserved at the conclusion of the hearing. Before judgment was handed down on 14 May 2003, a letter dated 3 April 2003 was received from the petitioners' solicitors, stating that they have instructions to apply for the appointment of provisional liquidators to explore the benefits to creditors of a rescue or restructuring as opposed to immediate liquidation. In view of this communication, notwithstanding I have ruled in favour of the petitioners on their locus to present the petition, which was the only ground raised in opposition, I did not make a winding-up order immediately and gave directions that the petition is to be restored to a date to be fixed, to deal with the application proposed to be made for the appointment of provisional liquidators.

3. After judgment was handed down and on 22 May 2003, the petitioners issued the present summons. Evidence in support and in opposition was filed pursuant to the directions given. On 20 June 2003, the petitioners issued a summons to amend the summons for appointment of provisional liquidators. The majority of the proposed amendments are designed to assist the provisional liquidators in dealing with overseas parties and assets belonging to overseas entities and to clarify the basis on which powers in respect of subsidiaries of the Company are being sought to be exercised.

4. Two further creditors, Avenue Asia International Limited and Avenue Asia Investments, L.P., have given notice of intention to appear as supporting creditors on 2 April 2003. When they learned of the intention of the petitioners to apply for the appointment of provisional liquidators, they have written to the petitioners' solicitors on 19 May 2003 indicating their support for the application. These creditors are allegedly owed a total of US$18 million as holders of the Guaranteed Floating Rate Notes issued by the Company due 2001.

5. The Company has admitted its insolvency at the hearing of the petition. For background information relating to the Company, its parent company in Korea, Jinro Limited ("Jinro Korea"), and its wholly owned subsidiary in Japan, Jinro Japan Inc. ("Jinro Japan"), I refer to paragraphs 4 to 8 of my judgment on 14 May 2003. The Company was effectively the vehicle for the investments of Jinro Korea outside Korea, and the principal asset of value of the Company is its holding of all the shares in Jinro Japan. Jinro Japan conducts a valuable and profitable business in the Japanese market importing and distributing an alcoholic beverage called soju, pursuant to distribution agreements probably made between Jinro Korea and Jinro Japan initially. Jinro Korea also has an arrangement with the Company to supply soju and related alcoholic products for sale in Hong Kong and Mainland China.

The grounds for the application

6. The petitioners are concerned that if a winding-up order were made, this might have negative effects on distribution agreements to which the Company or Jinro Japan is a party. It is possible that the making of a winding-up order might lead to automatic termination of such agreements or the granting of an automatic right to the other party to terminate. The petitioners' solicitors have repeatedly requested the Company to provide copies of the relevant distribution agreements, but the Company has chosen not to disclose any such agreement or document evidencing the arrangements in correspondence or to exhibit them to any of the affirmations filed herein.

7. According to the evidence filed by the Company, there was a shareholders' meeting of Jinro Korea on 28 May 2002 at which the "transfer of Japan-related liquor export business was approved as presented", "as part of its corporate restructuring efforts". The transferee company is a wholly owned subsidiary called JML Company Limited ("JML"), a company incorporated in Korea on 20 June 2002 with a total paid up capital of 50 million Won, which is apparently the statutory minimum amount. The petitioners do not know what exactly was transferred by Jinro Korea to JML but consider it likely that the transfer would have impinged on the business of Jinro Japan. According to the affirmation of Mr Hak Chul Kim, the president of JML filed on behalf of the Company on 13 June 2003, under the current arrangement, JML is the sole supplier of soju and related alcoholic beverages distributed by Jinro Japan.

8. The petitioners are also concerned about the likely negative reaction of the senior management and staff of Jinro Japan to a perceived "liquidation scenario" as a result of the winding up of the Company. The Japanese employees would be very important to preserving the value in the business there and the continuation of ongoing operations. The petitioners are of the view that the Japanese employees would be more likely to cooperate and provide support if they understand that provisional liquidators are looking to rescue and turn round the business of Jinro Japan instead of closing it down.

9. Hence, the petitioners seek the appointment of provisional liquidators to preserve and protect the assets and businesses of the Company and Jinro Japan, to allow for an independent investigation and review of the commercial options for restructuring of the Company, which, if feasible, is likely to enhance the return to creditors. It is envisaged that provisional liquidators would take steps to secure the Company's shareholding of Jinro Japan, implement arrangements to supervise Jinro Japan and its business, and take such action as may be necessary to prevent the dissipation of assets or the disruption of business. Given the strong performance of Jinro Japan, these assets should be attractive for sale or investment if offered by provisional liquidators and appropriately packaged or structured. The provisional liquidators would have greater flexibility, as compared to a winding up, to plan and implement structuring options, ranging from a scheme of arrangement to a sale of the Company or individual businesses.

10. A receiver has been appointed recently for Jinro Korea by the Korean Court, as I will mention further. The petitioners seek the appointment of provisional liquidators to "mirror" the appointment of the receiver in Korea, so as to allow these court appointed officials to explore together the possibility of a restructuring process which might well be to the advantage of all the creditors of the Company and the Jinro Group as a whole. The Company and Jinro Japan could be an attractive part of a larger restructuring centring on Jinro Korea's operations. It is recognised that the value of the Jinro Group may be maximized by a group-wide restructure by cooperation with the receiver in Korea, than from a realisation or restructuring of the separate business components in Korea, Hong Kong and Japan.

11. The petitioners have explained that they did not make this application at an earlier stage due to the vigorous challenge by the Company of their locus to petition for winding up.

12. The application thus framed is primarily "rescue-based" rather than "jeopardy-based". The timing of the application is influential in this regard. As the court is minded to wind up the Company immediately but for this application, there is scarcely any need for provisional liquidators to be appointed purely to protect assets at this late stage. Once a winding-up order is made, under section 194(1)(a) of Cap. 32, the Official Receiver is automatically the provisional liquidator and continues to act as such until the liquidator is appointed.

13. The basic requirements to be satisfied for such an appointment to be made are well established (Re Five Lakes Investment Co. Ltd [1985] HKLR 273). The applicant must show a good prima facie case for the making of a winding-up order at the ultimate hearing of the petition. As I have ruled in favour of the petitioners in the substantive hearing of the petition that they are entitled to a winding-up order, this requirement is clearly satisfied, notwithstanding that the Company has filed a Notice of Appeal against the judgment. The other requirement is that it must be shown that it is appropriate for provisional liquidators to be appointed, having regard to the commercial realities, the degree of urgency and need established by the applicant, and the balance of convenience in all the circumstances of the case.

14. There is no dispute that it may be appropriate for provisional liquidators to be appointed to facilitate a corporate rescue in order to maximise recovery for creditors, if it is demonstrated that a valuable asset, such as the listing status of the company, may be realised in the event that the company is not wound up (Re Keview Technology (BVI) Ltd [2002] 2 HKLRD 290; Re Luen Cheong Tai International Holdings Ltd [2002] 3 HKLRD 610 and [2003] HKEC 90; Re I-China Holdings Ltd [2003] HKEC 35; Re Fujian Group Ltd [2003] HKEC 266).

15. The timing of the present application differs from the cases cited above. There is no listing status here that provides a specific focus for the corporate rescue. However, I do not think these distinguishing features should matter for present purpose. As submitted by Mr Bartlett, who appeared for the petitioners, the principles stated in the above cases are of broad scope and not predicated on the peculiar phenomenon of the availability of a listing asset for realisation. There is no statutory restriction on the circumstances of appointing provisional liquidators or on the width of the powers of provisional liquidators under section 193(3) of Cap. 32 or rule 28(1) of the Companies (Winding-up) Rules. The court's discretion is unfettered provided it is exercised in a "proper judicial manner" (Re Highfield Commodities Ltd [1985] 1 WLR 149 at 159). As stated in Re Keview Technology, supra. at 293C: "The duty of the Court is to see what, in the circumstances of each case, within the existing framework of the law, can be done, which is just and fair to all the parties involved in a winding-up petition, in particular, creditors seeking to maximise recovery". Besides, the distribution rights of Jinro Japan may be destroyed by a winding-up order, so in that respect they would share some of the characteristics of the listing status of the companies concerned in the cases cited.

16. If upon investigation by the provisional liquidators, it should be considered that there is in fact no benefit to the creditors in restructuring, the provisional liquidators or the petitioners would proceed to seek a winding-up order. This would not be regarded as an abuse of the process of the court (Re Luen Cheong Tai, supra. at 620C to D).

17. I am satisfied that from a jurisdictional perspective, there is no obstacle to appointing provisional liquidators in this instance. The question is whether the discretion should be exercised in favour of an appointment.

Recent developments in Korea

18. I turn to the recent developments in Korea.

19. On 31 March 2003, after the hearing of the petition, Jinro Korea has defaulted under its composition plan, which was sanctioned by the Seoul District Court on 19 March 1998. As a result, Senna Investments (Ireland) Limited ("Senna"), a Goldman Sachs company which holds debt issued by Jinro Korea, filed a reorganisation petition. This is a procedure similar to the appointment of a receiver to the debtor company at the behest of its creditors.

20. On 14 May 2003, the Seoul District Court ruled in favour of Senna on its application and appointed Mr Lee Won ("the Korean receiver") as the receiver of Jinro Korea. Jinro Korea has lodged an appeal against the reorganisation order, but the order remains in effect pending the determination of the appeal. The effect of the reorganisation order, as I am given to understand, is that the power of the board of directors is suspended immediately and such suspension will be effective until the termination of the reorganisation process. It would appear from the order, of which a rough translation has been provided, that the powers of the Korean receiver are subject to the supervision of the Korean Court, and for most substantial matters prior court approval is required. It should also be noted that the reorganisation order applies only to Jinro Korea and not to its subsidiaries, such as the Company and JML, although it is possible for the receiver to exercise the rights of Jinro Korea as shareholder of its subsidiaries and replace or change the board of directors of its subsidiaries in accordance with the applicable corporate law and rules of the relevant jurisdiction.

21. The Jinro Group does appear to have a viable core business in the production of alcoholic beverages notwithstanding its heavy debt burden. With the reorganisation order, it would seem that the restructuring would be driven by the Korean Court, the Korean receiver and the creditors of Jinro Korea, rather than by the Jinro Group itself.

22. Also on 14 May 2003, the Korean office of KPMG, KPMG-Samjung ("KPMG"), was appointed by the Seoul District Court to act as the Official Examiner and conduct financial due diligence on Jinro Korea and its subsidiaries, including the Company and Jinro Japan, and to report to the court the current financial position of each of these entities. The report of KPMG has to be filed with the court by no later than 31 July 2003, and will be available for inspection by all creditors of Jinro Korea.

23. The Seoul District Court has convened a first creditors' meeting to be held in Korea on 27 August 2003, when the report of KPMG will be considered by all creditors of Jinro Korea and the next steps can be considered and agreed upon. A corporate reorganisation plan, if formulated after the first creditors' meeting, would require the approval of 75% of those secured creditors and 67% of those unsecured creditors who have filed claims in the reorganisation proceedings as well as the confirmation of the court. About 6% of the total unsecured indebtedness of Jinro Korea arose out of its guarantee for the Floating Rate Notes issued by the Company, according to the current estimate of the Korean receiver, so to that extent there are creditors in common for Jinro Korea and the Company.

24. I should mention that at the outset of this hearing, Miss Ismail, who appeared for the Company, sought an adjournment of the application to appoint provisional liquidators until after the first creditors' meeting of Jinro Korea on 27 August 2003, to see what position might be arrived at for a group-wide restructuring, alternatively for three weeks, for the Company to respond to certain matters in the evidence in reply served by the petitioners on 21 June 2003. I refused to adjourn the application. I do not think what the Company may wish to answer in the reply evidence of the petitioners would be of critical importance to this application. As for the possibility of a group-wide restructuring, I have reservations if it would become sufficiently clear after the first creditors' meeting that this might be implemented. A group-wide restructuring is likely to be a complex and time-consuming exercise. It would not be appropriate to adjourn the application to await any further development at the first creditors' meeting in the circumstances. Whatever views the Korean receiver may hold on the possibility of a group-wide restructuring could be taken into consideration in the exercise of the discretion if provisional liquidators should be appointed.

Evidence in opposition

25. The main evidence filed by the Company in opposition to the application is an affirmation of the Korean receiver made on 13 June 2003. The Korean receiver is an independent officer of the court with such powers to act given to him by the court and by law. He regards it as his part of his responsibility to safeguard as far as possible the assets of the subsidiaries of Jinro Korea and the value of the businesses conducted by them, so as to preserve "shareholder value" for Jinro Korea and its creditors. He has opposed the appointment of provisional liquidators for the Company for these reasons.

26. Firstly, the Korean receiver is concerned that if provisional liquidators are appointed for the Company, they would interfere with the due diligence work of KPMG and the preparation of the report by the latter. KPMG has not started its review of the financial records of the Company and Jinro Japan at the time the Korean receiver made his affirmation herein. The Korean receiver is confident that KPMG would be given appropriate access to the records so long as he is able to exercise control over the Company and Jinro Japan, as at the moment. He is concerned that such access to the books and records of the Company and Jinro Japan might be denied to KPMG by the provisional liquidators, or that the provisional liquidators might not make available the key managers and employees for interview by KPMG because they would require the staff for other tasks.

27. Secondly, as one of the functions of the Korean receiver is to explore the possibility of a restructuring of the overall debts of Jinro Korea, including the debts of its subsidiaries that it has guaranteed, he considers it important that he should try to maintain control of the subsidiaries as far as possible. He has deposed that to the extent that he is able to exercise control over the existing directors and management of the Company and Jinro Japan, he intends to continue the current distribution agreements and to provide other support to them such as financial support including payment of necessary expenses, licence of intellectual property rights, marketing and advertising, and product development, to enable the businesses of the Company and Jinro Japan to continue as going concerns, whilst the possibility of a group-wide restructuring is explored. If, however, he is not able to control the affairs of the Company or Jinro Japan, with the appointment of provisional liquidators, he would "immediately recommend" to the Seoul District Court and seek its approval to terminate the distribution agreements and the financial and other support to the Company and Jinro Japan referred to above (regardless of whether the agreements would permit termination), and cause Jinro Korea to establish new distribution arrangements for Japan, Hong Kong and mainland China. His reasons for doing so would appear to be as follows.

28. He is of the view that the Company and Jinro Japan should be viewed as component parts of a "single, vertically integrated manufacturing and distribution business", conducted through the Jinro Group, and it would not be in the interests of Jinro Korea and its creditors, or the Jinro Group, to have the distribution of the group's products in Japan, Hong Kong and mainland China under the separate management of provisional liquidators.

29. Furthermore, he is of the view that the benefits to creditors of Jinro Korea, including the creditors of the Company as guaranteed by Jinro Korea, would be maximised if restructuring efforts for the Jinro Group were "centralised" and implemented from the level of Jinro Korea under his administration, rather than for each company in the group to explore separate individual restructuring possibilities under the administration of its own insolvency practitioner. There is no certainty that the provisional liquidators of the Company would cooperate with him towards a group-wide restructuring. He is concerned at the possibility that certain creditors of the Company may exert influence over the provisional liquidators causing them to refuse to cooperate.

30. Thirdly, under the Korean law, the receiver is duty bound to treat all creditors of Jinro Korea, and creditors of its subsidiaries as guaranteed by the parent company, fairly and to ensure that no creditor is preferred at the expense of others. He is obliged to submit to the court business and management reports on a monthly basis, balance sheet and profit and loss statements on a quarterly basis, and all creditors of Jinro Korea would have access to these reports. The Korean receiver has deposed that he is willing to undertake to use his best endeavours "to ensure that no creditor of [the Company] is unfairly prejudiced to the benefit of creditors of [Jinro Korea] or of other companies in the Jinro Group" and "to ensure as far as possible that any restructuring proposal submitted by [Jinro Korea] treats creditors of [the Company] fairly". Accordingly, he is of the opinion that provisional liquidators are "not necessary for the protection of [the Company's] creditors whose claims are guaranteed by [Jinro Korea], as their interests are already adequately protected through [his] appointment".

31. Miss Ismail submitted on behalf of the Company that significant weight should be attached to the views of the Korean receiver, in particular, his avowed intention to terminate the distribution arrangements of the Company and Jinro Japan regardless of whether the termination would constitute a breach of contractual provisions. She also emphasised that the Korean receiver has deposed in his affirmation that he was advised by lawyers in Korea that if he were to apply to court for approval to terminate the distribution agreements, it is "highly likely" that the court in Korea would grant approval. If that should happen, that would defeat the very objective of the petitioners in this application to bring about an enhancement of value for creditors.

Exercise of the discretion

32. There is no evidence to suggest that the provisional liquidators, who would function as officers of the court, may not cooperate with KPMG in providing information of the financial position of the Company and Jinro Japan or that they may not cooperate with the Korean receiver towards a group-wide restructuring. To the contrary, the petitioners have produced a letter from Ferrier Hodgson Limited dated 19 June 2003 stating that if their directors were to be appointed, they would cooperate with KPMG fully to establish the Company's financial position and work with the Korean receiver in relation to the possibility of a group-wide restructuring. Specifically, the proposed provisional liquidators would seek to agree and implement a Cross Border Protocol arrangement with the Korean receiver to deal with issues of concern to both including the following:

(1) harmonizing and coordinating the proceedings in Hong Kong and Korea, and Japan if required;

(2) ensuring the orderly and efficient administration of proceedings in the above jurisdictions;

(3) identifying, preserving and maximising the value of Jinro Group's worldwide assets for the collective benefit of the creditors of Jinro Group and other interested parties, wherever located;

(4) sharing of information and to minimise duplication of effort and costs; and

(5) complying with the laws of Hong Kong and Korea, and to satisfy the statutory and professional obligations of the Korean receiver and the provisional liquidators.

It seems to me that the concerns of the Korean receiver of lack of cooperation from the provisional liquidators should be allayed.

33. As for the control that the Korean receiver claims he has over the Company and Jinro Japan, his control is exercised by virtue of the rights of Jinro Korea as shareholder in that he can change the board of directors in accordance with the applicable corporate laws. He does not exercise direct control over these companies, as control is vested in the board of directors and the existing management. I therefore find it difficult to understand the importance of the shareholder's control to the Korean receiver in the discharge of his duties to safeguard the assets and businesses of the subsidiaries of Jinro Korea so as to warrant the draconian step he proposes to take to terminate the distribution agreements if provisional liquidators were appointed for the Company. It is odder still that he should immediately resort to such action without even allowing time to assess for himself whether the effect of such an appointment would indeed bring about any adverse consequence or disruption to the distribution businesses in Japan, Hong Kong and mainland China. After all, the provisional liquidators would be just as concerned as the Korean receiver to preserve the value in the distribution businesses and continue with ongoing operations, in order to bring about a restructuring process that would maximise recovery for the creditors.

34. In this application, the court is concerned with protection of the interests of the creditors of the Company. As the Company is insolvent, the interests of its shareholders are subservient to those of its creditors. The obligations and concerns of the Korean receiver are directed to the interests of Jinro Korea and its creditors, not to the interests of the creditors of the Company, unless they happen incidentally to be also the creditors of Jinro Korea. There is no evidence that the interests of the creditors of Jinro Korea are co-extensive with the interests of the creditors of the Company. It is clear that the indebtedness of Jinro Korea is substantial, whereas the full extent of the Company's current liability to creditors and their identity is not known. The Official Receiver is rightly concerned that the management and shareholders should continue to be in control of the Company, an insolvent entity, without any party looking after the interests of the creditors. Even though the Korean receiver has said he would use "best endeavours" to ensure that the creditors of the Company are treated fairly in any restructuring of Jinro Korea, he could not properly represent the interests of both the creditors of Jinro Korea and the creditors of the Company if those interests should diverge. I agree with the submissions of Mr Bartlett, and Miss Mckenna of the Official Receiver, that the situation calls for independent representation for the creditors of the Company.

35. As for the steps the Korean receiver may take to terminate the distribution agreements, he would need to apply to the court in Korea for approval and the creditors of Jinro Korea would be heard on the application. The Korean receiver has not stated in his affirmation why it is "highly likely" that his application would be granted even if creditors should object to this. The termination of distribution agreements is a draconian move, this would give rise to massive expense and an enormous amount of work. According to the affirmation of Mr Hak Chul Kim referred to earlier, termination of the distribution agreement may render Jinro Japan liable to pay damages to customers, wholesalers and distributors. Mr Tae Sub Kim, a director of the Company, said much about the same thing in his affirmation filed on 13 June 2003 as to potential liability of the Company to pay damages to customers, wholesalers and retailers, if commitments or orders could not be fulfilled owing to the termination of the distribution agreement. Both deponents are curiously non-committal as to any claim for damages Jinro Japan or the Company might have against Jinro Korea in respect of the termination of the distribution agreements, save to say that the value of any such claim would be uncertain in view of the insolvency proceedings relating to the parent company. I proceed on the basis that any decision of the Korean receiver to apply to court to approve the termination of the distribution agreements would not be taken lightly, without regard to all relevant considerations, and contrary to his professed willingness to undertake to use best endeavours to ensure that no creditor of the Company is unfairly prejudiced to the benefit of creditors of Jinro Korea or of other companies in the Jinro Group. In the event that such an application were made by the Korean receiver, I proceed on a similar basis that the court in Korea would take into account any valid objection that may be raised by any of the creditors and all relevant circumstances before reaching an appropriate decision.

36. The position of the Official Receiver on this application is that the court should take steps to protect the interests of the creditors of the Company by the appointment of an independent third party to manage the affairs of the insolvent entity in accordance with Hong Kong law. The option of allowing the Korean receiver to retain control of the Company in light of his stated intention is not supported by the Official Receiver. As regards the choice between the appointment of provisional liquidators and a winding-up order, the Official Receiver is in favour of the former, as the option of restructuring should be fully explored by an independent third party for the benefit of all creditors in the hope of achieving a group-wide restructuring.

37. In my judgment, in the interests of the creditors of the Company, the discretion should be exercised in favour of appointing provisional liquidators for the Company.

Orders

38. I grant leave to the petitioners to amend their summons for the appointment of provisional liquidators. I make an order in terms of paragraphs 1 to 3 of the amendment summons filed herein on 20 June 2003.

39. I turn to the amended draft order which is prepared on the basis of the summons as amended.

40. The petitioners initially offered an undertaking as to damages as it was unclear at the time of filing of the application whether this would be opposed by the Company. It was submitted that as the application was made inter partes and the Company was heard, it may not be strictly necessary to require an undertaking as to damages from the petitioners. Mr Bartlett referred me to Re The Prudential Enterprise, Limited HCCW No. 594 of 1999, 2 April 2003, paras. 57 to 59, which in turn referred to Highfield Commodities, supra. and some Australian decisions. I note the general practice is not to require an undertaking to be given where the application is inter partes, and it is recognised by Chu J in Prudential Enterprise that there may well be cases where it is necessary to extract an undertaking on an inter partes application. I consider the present case to be such an instance, in view of the avowed intention of the Korean receiver to seek to terminate the distribution agreements on the appointment of provisional liquidators.

41. I make an order appointing Mr Kelvin Edward Flynn, Mr Roderick John Sutton and Mr Desmond Chung Seng Chiong, all of Ferrier Hodgson Limited, jointly and severally as the provisional liquidators of the Company until further order upon, inter alia, the petitioners' undertaking as to damages. The terms of their appointment and other orders I make on the amended summons are as per the amended draft order, with the exception of the following:

(1) In paragraph 3(3), I delete the word "examinations" to make clear that an application to the court is required if it is sought to conduct examinations of any one under section 221 of Cap. 32.

(2) I delete paragraphs 3(5) and (19) which relate to disposal of the assets of the Company without first obtaining the sanction of the court, even though they are qualified by the words "so far only as may be necessary for the purpose of protecting the assets of the Company, and managing the affairs of the Company". They are objected to by the Official Receiver as being too wide. I do not think the work of the provisional liquidators would be hampered if they are required to seek court approval for disposition of assets.

(3) Paragraph 3(29) is to be varied in the manner as suggested by Mr Bartlett in that the last part of the opening words is to read "which may include but are not limited to the following", to address the concern raised by Miss Ismail that wider powers would appear to have been given in relation to the subsidiaries, which is not the case.

(4) Similar alterations are made in relation to the powers exercised in relation to the subsidiaries, as I have done in respect of the Company in (1) and (2) above. Thus the word "examinations" is to be deleted from sub-paragraph (c) and sub-paragraphs (e) and (p) are to be deleted.

(5) Paragraph 4 is to be varied by deleting the words "forthwith deliver to the Provisional Liquidators" and substituting them with "cause to be delivered to the Provisional Liquidators as soon as practicable". This relates to the delivery up of the Company's share certificate of Jinro Japan, which is not in the custody of the Company but is in the custody of the Korean receiver.

(6) Paragraph 6 is to be varied by inserting these opening words "subject to the approval of the court", this relates to the remuneration of the provisional liquidators.

(7) The last paragraph relating to the non-avoidance of disposition by the provisional liquidators by virtue of section 182 of Cap. 32 is deleted as this can be dealt with when the provisional liquidators seek approval of the court to dispositions.

42. In view of the above orders on the appointment of provisional liquidators, I give these further directions as to the hearing of the petition:

(1) The petition is to be adjourned to 15 September 2003 9:30 am.

(2) The provisional liquidators are to submit a report to the court 7 days before the adjourned hearing on the progress of restructuring for the Company.

(3) The petitioners are to file and serve evidence on the orders they propose to seek at the adjourned hearing by 10 September 2003.