Cp Global Inc. (Receivers And Managers Appointed) And Another v Guy Kwok-hung Lam And Another

CourtCourt of First Instance (Hong Kong)
Judgment Date21 July 2021
Neutral Citation[2021] HKCFI 2135
Subject MatterMiscellaneous Proceedings
Judgement NumberHCMP1647/2020

HCB 4115/2020

[2021] HKCFI 2135






Re: GUY KWOK-HUNG LAM (林國雄) Debtor


HCMP 1647/2020






IN THE MATTER OF CP Global Inc. (receivers and managers appointed)
IN THE MATTER OF CP Assets Limited
(receivers and managers appointed)
1st Plaintiff
GUY KWOK-HUNG LAM (林國雄) 1st Defendant
CINDY FUNG (馮蝶兒) 2nd Defendant


Before: Hon Linda Chan J in Court

Date of Hearing: 9 June 2021

Date of Judgment: 21 July 2021




1. There are 2 proceedings before the Court:

(1) A petition presented by Tor Asia Credit Master Fund LP (“Petitioner”) on 15 June 2020 (as amended on 12 October 2020) (“Petition”) seeking a bankruptcy order against Mr Lam Kwok-Hung Guy (“Lam”).

(2) An originating summons (“OS”) issued by the 1st plaintiff, CP Global Inc. (receivers and managers appointed) (“Borrower”), and the 2nd plaintiff, CP Assets Limited (“CP Assets”), (together “Ps”) on 5 October 2020 for an injunction against Lam and Ms Cindy Fung (“Fung”) (together “Ds”) to compel them (a) to deliver up the books, records and assets of the Borrower and CP Assets which are in their possession or control, (b) to allow the “Receivers” (as defined in §20(2) below) and the incumbent directors of Ps to have access to Ps’ business premises and assets, (c) to take steps to inform the registered agent and the bank to ignore Ds’ instructions and (d) to refrain from interfering with Ps’ relationships with their agent and bank or holding out as directors and representatives of Ps.


2. The matters first came before this Court on 18 March 2021, but were adjourned to 9 June 2021, as it was clear from the 4 sets of skeletons then lodged by counsel[1] that the arguments (if all pursued) could not be completed within one day. More importantly, neither team of counsel has sufficiently addressed an important point of law namely, whether in light of the “exclusive jurisdiction clause” (“EJC”) whereby the parties agreed to submit to the exclusive jurisdiction of the New York court for the purpose of all legal proceedings arising out of the Credit Agreement, it is open to the Petitioner to pursue the Petition in Hong Kong.

3. At the hearing on 18 March 2021, this Court indicated that it appears from the parties’ written submissions that Ps had the right to seek the relief sought in the OS and, in any event, it would be in the interests of all parties that the Receivers would be able to carry out their duties of managing the assets of Ps. On these bases, Ds were invited to consider whether they would oppose the relief sought in the OS. Upon taking further instructions, Mr John Hui (appearing with Mr Tommy Cheung) confirmed to the Court that Ds would not oppose the OS, but would reserve their right to argue on the costs of the OS. Consequently, an order was made in terms of the OS, and the parties were directed to inform the Court whether they could reach any agreement on costs.

4. By letter dated 25 March 2021, Messrs Robertsons (on behalf of Ds) informed the Court that no agreement had been reached, and the parties would argue on the costs of the OS at the adjourned hearing.

5. Shortly before the adjourned hearing, on 31 May 2021, Lam filed notices of intention to act in person in both proceedings. At the hearing, Lam appears in person.

6. As regards the costs of the OS, it has been agreed between Ps and Fung that there should be no order as to costs. As for Lam, he maintains that Ps have no basis to pursue the relief sought in the OS for the same reasons he advanced in opposition to the Petition.


B1. Parties

7. The Petitioner is an exempted limited partnership formed and registered in the Cayman Islands. The Borrower and its wholly owned subsidiary, CP Assets, are companies incorporated in the Cayman Islands.

8. The Borrower is the ultimate holding company of a group of companies engaging in the business of provision of aged care services in the Mainland (collectively “CP China Group”) and through CP Assets, holds 90.48% equity in CP Senior Care (Shenzhen) Co, Ltd (“CP Shenzhen”) which, in turn, holds 100% equity in a company which owns and operates elderly home referred to as “CP 5” and “CP 16” projects, and 90% indirect equity in CP Silver Beach Investment (Huidong) Co Ltd (“CP Silver Beach”) which owns and operates another elderly home referred to as “CP 18” project.

9. There is another group of companies providing aged care services in the United States of America (collectively “CP US Group”) with CP Holdings LLC (“CP Holdings”) at its apex. The CP US Group has been managed by Mr Andrew Oksner (“Oksner”) and Mr Bing Cong Lin who are their president/secretary or manager.

10. CP China Group and CP US Group will be referred to as “Groups”. The charts showing the corporate structure of the Groups are annexed to this Judgment.

11. Lam is a solicitor qualified to practise in Hong Kong. He is the founder of the Groups. He has 85% beneficial interest in CP Holdings and holds the only issued share in the Borrower (“Share”). Until the enforcement of the “Equitable Mortgage” (as defined in §14(2) below) on 15 April 2020, Lam was the sole director of the Borrower and CP Assets and the Chairman of the Groups.

12. Fung is an employee based in Hong Kong and dealt with matters relating to the Groups. Until 2 February 2021, she was a director of CP Shenzhen.

B2. Relevant agreements

13. Pursuant to the credit and guaranty agreement dated 11 July 2017 entered into between, inter alios, the Borrower, the Petitioner (as lender), Lam (as personal guarantor) (“Credit Agreement”), the Petitioner advanced various term loans in the aggregate amount of US$29,500,000 (“Term Loans”) to the Borrower.

14. The Term Loans were secured by, inter alia, the following security executed in favour of the Petitioner:

(1) The personal guarantee given by Lam under cl 10.01 of the Credit Agreement whereby he agreed to guarantee, as primary obligor, the payment in full of all amount due and owing by the Borrower without any demand or notice (“Guarantee”).

(2) The equitable mortgage dated 11 July 2017 (“Equitable Mortgage”) executed by Lam whereby a first equitable mortgage was created over all of his interest and rights in the Share together with signed and undated letters of resignation as director of the Borrower and CP Assets and an irrevocable authorisation authorising the Petitioner to date such letters of authorisation upon an event of default.

(3) The security agreement dated 11 July 2017 (“Security Agreement”) executed by the Borrower creating a charge over most of its assets (except the Share and other specified assets) (“Assets”).

(4) The security and pledge agreement dated 11 July 2017 executed by CP Holdings and some of its subsidiaries over the issued equity interests they owned in the subsidiaries within the CP US Group together with the “Collateral” specified therein (“Security and Pledge Agreement”).

(5) The equitable mortgage dated 12 August 2019 executed by the Borrower over all the issued shares in CP Assets.

(6) The equity pledge dated 12 August 2019 executed by CP Assets over the 90.48% equity in CP Shenzhen.

15. The parties agreed to amend the Credit Agreement by entering into the following agreements:

(1) an amendment and joinder to credit and guaranty agreement dated 31 July 2017 (“1st Amendment Agreement”);

(2) a second amendment to credit and guaranty agreement dated 6 December 2017 (“2nd Amendment Agreement”); and

(3) a waiver, third amendment and joinder to credit and guaranty agreement dated 22 June 2019 (“3rd Amendment Agreement”).

16. Prior to entering into the 3rd Amendment Agreement, there were multiple events of default including the Borrower’s failure to pay accrued cash interest by 31 December 2018 and 29 March 2019, and to repay the Term Loans by their original due date of 12 July 2019.

17. Under the 3rd Amendment Agreement the parties agreed, inter alia, that (1) there had been events of default under the Credit Agreement (as amended), (2) the Petitioner agreed to waive such events of default upon compliance with all the conditions stipulated in Part 2 therein, and (3) the Term Loans would become due and payable by 31 December 2019.

18. Under cl 2.04(b) of the Credit Agreement, the Borrower has the option to extend the maturity date of the Term Loans from 31 December 2019 to 13 July 2020 upon payment of an extension fee equivalent to 0.5% of the principal amount to be extended and the “Pay Down Amount” (as defined therein) on or before 31 December 2019. The Borrower did not exercise the option.

B3. Event of default

19. The Borrower did not repay the Term Loans by 31 December 2019 which constituted an event of default under cl 2.04(a) and cl 9.01(a). Nor did Lam repay the Term Loans.

20. On 15 April 2020, the Petitioner took steps to enforce the security provided by the various parties. These included:

(1) issuing notice to exercise its rights under the Security and Pledge Agreement to replace the managers/directors of the companies listed (all of which are companies within the CP US Group) with the new manager/director nominated by the Petitioner;

(2) exercising the right under cl 9.1 of the Equitable Mortgage and cl...

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