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Nuoxi Capital Ltd (In Liquidation In The British Virgin Islands) v Peking University Founder Group Co Ltd

Judgment Cited authorities 8 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date11 October 2022
Neutral Citation[2022] HKCA 1514
Subject MatterMiscellaneous Proceedings
CourtCourt of Appeal (Hong Kong)
Judgement NumberCAMP78/2022
CAMP78/2022 NUOXI CAPITAL LTD (IN LIQUIDATION IN THE BRITISH VIRGIN ISLANDS) v. PEKING UNIVERSITY FOUNDER GROUP CO LTD

CAMP 78-82/2022
(Heard together)

[2022] HKCA 1514

CAMP 78/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 78 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 778 OF 2021)

________________________

BETWEEN
NUOXI CAPITAL LIMITED
(諾熙資本有限公司)
(IN LIQUIDATION IN THE BRITISH VIRGIN ISLANDS)		 Plaintiff
and
PEKING UNIVERSITY FOUNDER GROUP COMPANY LIMITED
(北大方正集團有限公司)		 Defendant

________________________

AND

CAMP 79/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 79 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 798 OF 2021)

________________________

BETWEEN
FOUNDER INFORMATION (HONG KONG) LIMITED
(香港方正資訊有限公司)
(IN LIQUIDATION)		 Plaintiff
and
PEKING UNIVERSITY FOUNDER GROUP COMPANY LIMITED
(北大方正集團有限公司)		 Defendant

________________________

AND

CAMP 80/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 80 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 1418 OF 2021)

________________________

BETWEEN
HONGKONG JHC CO., LIMITED
(香港京慧誠有限公司)
(IN LIQUIDATION)		 Plaintiff
and
PEKING UNIVERSITY FOUNDER GROUP COMPANY LIMITED
(北大方正集團有限公司)		 Defendant

________________________

AND

CAMP 81/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 81 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 1442 OF 2021)

________________________

BETWEEN
KUNZHI LIMITED
(坤智有限公司)
(IN LIQUIDATION IN THE BRITISH VIRGIN ISLANDS)		 Plaintiff
and
PEKING UNIVERSITY FOUNDER GROUP COMPANY LIMITED
(北大方正集團有限公司)		 Defendant

________________________

AND

CAMP 82/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 82 OF 2022

(ON AN INTENDED APPEAL FROM HCMP NO 1831 OF 2021)

________________________

IN THE MATTER of Peking University Founder Group Company Limited (北大方正集团有限公司) (in Restructuring in the Mainland of the People’s Republic of China)
and
IN THE MATTER of the inherent jurisdiction of the Court

______________________

BY
ZHENG ZHIBIN (郑志斌) Applicants
ZHANG TING (张婷)
(MEMBERS OF THE PEKING UNIVERSITY FOUNDER GROUP LIQUIDATION GROUP, ADMINISTRATOR OF PEKING UNIVERSITY FOUNDER GROUP COMPANY LIMITED
(北大方正集团有限公司)
(IN RESTRUCTURING IN THE MAINLAND OF THE PEOPLE’S REPUBLIC OF CHINA))

(Heard Together)

______________________

Before: Hon Kwan VP and Chow JA in Court

Date of Hearing: 27 September 2022

Date of Judgment: 11 October 2022

______________________

J U D G M E N T

______________________

Hon Kwan VP (giving the Judgment of the Court):

Introduction

1. Peking University Founder Group Company Limited (“the Company”) is the defendant in each of HCA 778, 798, 1418 and 1442 of 2021 (“the Actions”). In July 2021, the Company applied by summonses for, inter alia, orders that the Actions be stayed such that the relevant disputes with the plaintiffs in the Actions could be resolved in the reorganisation proceedings taking place before the Beijing No. 1 Intermediate People’s Court (“Beijing Court”).

2. Mr Zheng Zhibin and Ms Zhang Ting are among the members of a liquidation group (“the Administrator”) appointed by the Beijing Court to supervise the reorganisation of the Company. On 18 November 2021, they issued an originating summons in HCMP 1831 of 2021 (“HCMP 1831”) seeking recognition and assistance in the exercise of the powers of the Administrator in the restructuring. The assistance sought by them comprises, amongst other things, an order staying all proceedings against the Company, including but not limited to the Actions, save with the leave of the court and subject to such terms as the court may impose.

3. By a decision dated 17 December 2021 (“the Decision”)[1], Harris J recognised the Administrator and granted orders to assist them, including an order staying all proceedings against the Company for so long as it remains in restructuring in the Mainland. The general stay of proceedings does not apply to the Actions and the judge dismissed the Company’s summonses seeking a stay of the Actions.

4. Dissatisfied with the Decision, the Company and the Administrator applied for leave to appeal. The judge dismissed the application for leave to appeal on 22 February 2022 and handed down his reasons for decision on 4 March 2022 (“the Leave Decision”)[2].

5. By summonses dated 4 March 2022, the Company and the Administrator renewed their application before the Court of Appeal for leave to appeal. Further, by summonses dated 7 June 2022, the Company and the Administrator applied for leave to adduce new evidence for the purpose of the leave application, and, if leave is granted, for the appeal.

6. Having considered the written materials, we directed a rolled-up hearing of all the above summonses[3] with the view that if leave to appeal were to be granted, the hearing would be treated as that of the substantive appeal.

Background

7. The relevant background can be found in §§3 to 15 of the Decision. For present purposes, the following summary will suffice.

8. Nuoxi Capital Limited (“Nuoxi”) and Kunzhi Limited (“Kunzhi”) are the plaintiff in HCA 778 of 2021 and the plaintiff in HCA 1442 of 2021 respectively. Nuoxi and Kunzhi respectively issued bonds of US$900 million and US$800 million in 2017 and 2018. Hong Kong JHC Co Limited (“HKJHC”) and Founder Information (Hong Kong) Limited (“FIHK”), the plaintiff in HCA 1418 of 2021 and the plaintiff in HCA 798 of 2021 respectively, are the respective guarantors of the Nuoxi bonds and the Kunzhi bonds (collectively “the Bonds”).

9. The Company was incorporated in the Mainland and is the holding company of a commercial group whose activities stretched across a wide range of businesses. It is majority owned by Peking University Asset Management Co Limited, a state-owned enterprise wholly owned by Peking University which is ultimately controlled by the Ministry of Education. The Company had entered into (i) two Keepwell Deeds[4] in relation to the Nuoxi bonds with, inter alios, Nuoxi and HKJHC dated 20 April 2017 and 24 January 2018, as well as (ii) two Keepwell Deeds in relation to the Kunzhi bonds with, inter alios, Kunzhi and FIHK dated 17 April 2018 and 21 May 2018.

10. The material terms of all four Keepwell Deeds (collectively “Keepwell Deeds”) are identical. They are governed by English law and contain Hong Kong exclusive jurisdiction clauses. The Keepwell Deeds required the Company to cause each of Nuoxi, Kunzhi, HKJHC and FIHK (i) to have a consolidated net worth of at least US$1 at all times and (ii) to have sufficient liquidity to ensure timely payment by each of Nuoxi, Kunzhi, HKJHC and FIHK of any amounts payable under the Bonds.

11. Nuoxi and Kunzhi defaulted on their payment obligations under their respective bonds, and the guarantees given by HKJHC and FIHK have not been honoured. Nuoxi, Kunzhi, HKJHC and FIHK are now in liquidation, and they contend that the Company have breached the Keepwell Deeds.

12. On 19 February 2020, the Beijing Court issued an order that the Company commence reorganisation pursuant to the Enterprise Bankruptcy Law (“EBL”). By its decision dated 19 February 2020, the Beijing Court appointed the Administrator to supervise the reorganisation and to carry out the functions described in that decision.

13. On 21 February 2020, the Beijing Court issued an announcement directing creditors of the Company to submit their claims to the Administrator.

14. Each of Nuoxi, Kunzhi, HKJHC and FIHK have submitted claims in the Company’s reorganisation based on the Company’s breach of the Keepwell Deeds. Except for HKJHC’s claim, which has yet to be adjudicated, the Administrator rejected each of the said claims without giving any reasons. On 7 June 2021, Nuoxi, Kunzhi and FIHK lodged their objections to the Administrator in accordance with the EBL. Should the Administrator overrule the objections, Nuoxi, Kunzhi and FIHK would have 15 days to appeal to the Beijing Court.

15. Against the above background, Nuoxi, Kunzhi, HKJHC and FIHK (together “the plaintiffs”) commenced the Actions. The plaintiffs sought expedition of the trials as they are concerned that the Administrator will not set aside funds to pay their claims if they are admitted in the reorganisation. In response, the Company applied to stay the Actions. And about ten days prior to the hearing before the judge, the Administrator issued the originating summons in HCMP 1831 seeking recognition and assistance. It was supported by a letter of request of the Beijing Court dated 5 November 2021 (“the Letter of Request”). Save for §4 of the originating summons, which sought a general stay of all proceedings, the orders sought by the Administrator were relatively uncontroversial.

The Decision

16. The dispute at the hearing in November 2021 centred on whether the Actions should be stayed. As stated above, the judge granted a general stay of proceedings against the Company but...

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