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Re Founder Information (Hong Kong) Ltd

Judgment Cited authorities 5 Cited in Precedent Map Related
Vincent
Judgment Date08 June 2021
Neutral Citation[2021] HKCFI 1749
Year2021
Judgement NumberHCCW350/2020
Subject MatterCompanies Winding-up Proceedings
CourtCourt of First Instance (Hong Kong)
HCCW350B/2020 RE FOUNDER INFORMATION (HONG KONG) LTD

HCCW 350/2020

[2021] HKCFI 1749

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 350 OF 2020

________________

IN THE MATTER of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32)

and
IN THE MATTER of Founder Information (Hong Kong) Limited （香港方正資訊有限公司）(In Liquidation)

________________

Before: Hon Harris J inChambers

Date of Hearing: 8 June 2021

Date of Decision: 8 June 2021

________________

D E C I S I O N

________________

1. On 1 February 2021, I made an order winding up the Company [1]. The Company’s ultimate parent is Peking University Founder Group Company Limited (“PUFG”) which is in Mainland reorganisation proceedings. I understand that those proceedings are at an advanced stage. On 1 March 2021, I made a regulating order appointing the liquidators.

2. The Company’s creditors include The Bank of New York Mellon, which serves as trustee in connection with a series of floating rate bonds issued by Kunzhi Limited and guaranteed by the Company. One of the Company’s largest current assets is an approximately 60% shareholding in PKU Resources, which is incorporated in Bermuda and listed on the Main Board of the Stock Exchange of Hong Kong.

3. PKU Resources is an investment holding company with operating subsidiaries in the Mainland (together, “PKU Resources Group”). The PKU Resources Group’s business is principally in the distribution of information products, property development and property investment. PKU Resources’ shares have been suspended from trading since 26 April 2021. This is due to PKU Resources’ inability to publish on time its annual report for the year ended 31 December 2020.

4. PKU Resources’ management have refused to cooperate with the liquidators in their attempts to conduct an independent investigation in order to ascertain the value of PKU Resources and the interest that the Company holds in it. It would, however, appear that PKU Resources is itself facing financial difficulties. The liquidators’ investigations suggested to them that a number of PKU Resources developments in the Mainland have been halted due to lack of funding. The liquidators are concerned that in order to address PKU Resources’ financial problems, it is necessary for PKU Resources to identify an investor which is willing to provide them with the necessary finance.

5. It would also appear that PKU Resources’ subsidiaries in the Mainland are subject to pending litigation and creditor enforcement action. Those proceedings are currently stayed because of PUFG’s administration proceedings in Beijing. The liquidators have also established from the information available to them that trading in PKU Resources’ shares has been extremely thin.

6. In the circumstances, the liquidators consider that it is prudent to explore the prospects of a sale of the Company’s 60% shareholding in PKU Resources. They have taken a number of steps in order to do so. They have obtained a valuation of the shareholding from Greater China Appraisal Limited. The valuer has assessed the market value of the shares as at 17 May 2021 at HK$343.8 million.

7. The liquidators have also commenced a tender process. This required submissions of offers, the terms of which included the provision of a 10% deposit, also by 17 May of this year. This has resulted in three compliant offers. The average compliant offer price is HK$394.3 million, this is approximately 10% more than the valuation. In the circumstances, the liquidators’ view is that it would be prudent to dispose of the shareholding.

8. There are, however, two interested groups who have voiced objections to the liquidators’ proposed course of action. The first is, certain of the ultimate beneficial owners of the bonds. They have suggested that what is proposed amounts to a fire sale and that the liquidators should delay the sale pending obtaining a more informed assessment of the likely value of the Company’s interest in PKU Resources. They have not, however, been able to provide any information which supports their concern.

9. The second group are the Onshore Investors Consortium which is currently involve in the administration of PUFG in Beijing. The Consortium consists of Zhuhai Huafa Group Co, Ltd (on behalf of the Zhuhai State-owned Assets), Ping An Insurance (Group) Company of China Ltd and Shenzhen SDG Group Co Ltd. They have not, however, indicated a willingness themselves to buy the Company’s stake in PKU Resources. However, their representatives have indicated that if the sale were to proceed, they will take certain steps, in the...

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