Re The Liquidator Of Shenzhen Everich Supply Chain Co, Ltd

HCMP 708/2020

[2020] HKCFI 965

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 708 OF 2020

(INTENDED ACTION NO 123 OF 2020)

________________

________________

________________

________________________________

R E A S O N S F O R D E C I S I O N

________________________________

1. Shenzhen Everich Supply Chain Co, Ltd (深圳市年富供应链有限公司) (“Company”) is incorporated in the Mainland[1]. On 19 December 2019, the Shenzhen Intermediate People’s Court of Guangdong Province (廣東省深圳市中級人民法院) (“Shenzhen Court”) ordered that the Company be wound up on the grounds of insolvency. On 26 December 2018, the Shenzhen Court appointed Shenzhen Zhengyuan Liquidation Co, Ltd (深圳市正源清算事务有限公司) as the administrator (管理人) of the Company. The administrator plays the same role as a liquidator in our system. I shall refer to the administrator as the “Liquidator”.

2. On 3 April 2020, Judge Tang Shan (唐姗) of the Bankruptcy Court of the Shenzhen Court issued a letter of request to the Hong Kong court seeking recognition and assistance of the Liquidator [2]. The Liquidator has applied for recognition of the winding-up of the Company in the Mainland and the Liquidator’s appointment and status. In addition to recognition the court is asked to grant various powers to assist the Liquidator to do various things in Hong Kong that the Liquidator believes are necessary to progress the winding-up of the Company.

3. This is the 2^nd application to the Hong Kong court by a Mainland liquidator for recognition and assistance. The relevant principles are discussed comprehensively in my recent judgment in Re CEFC Shanghai International Group Ltd [3]. It is not necessary to repeat the analysis, but I will quote the most immediately relevant paragraphs:

“8. As I have already mentioned in recent years this Court has dealt with a large number of applications for recognition and assistance from various jurisdictions. These have principally been common law jurisdictions such as the Cayman Islands, Bermuda and the British Virgin Islands reflecting the fact that many Hong Kong listed companies are incorporated in one or other of those jurisdictions. One application has been granted in respect of a Japanese trustee in bankruptcy appointed by a Japanese court over a company incorporated in Japan, which is a civil law jurisdiction (eg Re Takamatsu).[4] From these decisions the following criteria emerge, which must be satisfied before recognition and assistance will be granted.

(a) the foreign insolvency proceedings are collective insolvency proceedings: Re Joint Provisional Liquidators of China Lumena New Materials Corp [5]; and

(b) the foreign insolvency proceedings are opened in the company’s country of incorporation: Re Joint Liquidators of Supreme Tycoon Ltd [6].

9. Provided the above criteria are satisfied, the Court may recognise insolvency proceedings opened in a civil law jurisdiction (Re Takamatsu).[7]

10. Upon the foreign insolvency proceedings being recognised, the Court will grant assistance to the foreign officeholders by applying Hong Kong insolvency law. The reasons for so doing are explained in the judgment of the Privy Council delivered by Lord Hoffmann in Cambridge Gas Transportation Corp v Official Committee of Unsecured Creditors of Navigator Holdings plc:[8]

11. The Companies Court does not, however, grant a foreign liquidator, whose appointment it has recognised all the powers available to a liquidator appointed by it pursuant to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 (‘Ordinance’). The principles that circumscribe the limits of the common law power of assistance are explained by Lord Sumption in Singularis Holdings Ltd v PricewaterhouseCoopers [9]:

(a) The power of assistance exists for the purpose of enabling foreign courts to surmount the problems posed for a world-wide winding up of the company’s affairs by the territorial limits of each court’s powers. Therefore, the power of assistance is not available to enable foreign officeholders to do something which they could not do even under the law by which they were appointed.

(b) The power of assistance is available only when it is necessary for the performance of the foreign officeholder’s functions.

(c) An order granting assistance must be consistent with the substantive law and public policy of the assisting court.

12. Accordingly, in Re Joint Liquidators of Supreme Tycoon Ltd [10] I held that ‘[i]n the case of liquidators appointed in jurisdictions with similar insolvency regimes to Hong Kong, the assistance may extend to granting orders that give the foreign liquidators substantially similar powers’.”

4. I am satisfied that the winding-up in the Mainland is a collective insolvency proceeding in the Company’s place of incorporation and that the Liquidator has been appointed by the Shenzhen Court to wind up the Company. I will, therefore, order that the winding-up and the Liquidator are recognised.

5. The order that I made in Re CEFC was appended to the decision. This was in order that practitioners and Mainland judges could see the powers of assistance that in standard cases the Hong Kong court is willing to order. I had hoped that it would encourage letters of request to be framed in a way which reflected the form of order that the Hong Kong court commonly grants as this assists in dealing with such applications. The letter of request issued by the Shenzhen Court does not track the order in Re CEFC although in substance it seeks (with one qualification that I address below) the same powers. It would be helpful if lawyers advising...