ONC Corporate Disputes and Insolvency Quarterly

Dear Clients and Friends,

This special newsletter aims to regularly update practitioners on important and noteworthy cases in the areas of corporate disputes and insolvency in Hong Kong, the UK and other common law countries. In this issue, we have highlighted:

·         8 Corporate Insolvency Cases

·         2 Cross-border Insolvency Cases

·         1 Restructuring Cases

·         6 Corporate Disputes Cases

·         7 Bankruptcy Cases

Our selection of cases and our analysis of them may not be exhaustive. Your comments and suggestions are always most welcome. Please feel free to contact me at [email protected]

Best regards,

Ludwig Ng

Partner, Solicitor Advocate

ONC Lawyers

HEADLINES OF THIS ISSUE

Corporate Insolvency Cases

1.     Does removing an insolvent party from a joint venture infringe the anti-deprivation rule?

Re Hsin Chong Construction Co Ltd [2019] 3 HKLRD 367

2.    Where a CVL is already in progress and the majority of the creditors it to continue, the petitioner must show some valid reason or special circumstance if the petitioner wishes to convert the CVL to compulsory liquidation

Re China City Construction (International) Co Ltd [2019] HKCFI 1617

3.     A company is prevented from arguing that it has a bona fide defence on substantial grounds to oppose a winding-up petition, if it previously has had the opportunity to argue, but decided entirely for its own reasons not to do so

Re C. Mahendra Exports (H.K.) Ltd [2019] HKCFI 1556

4.     Hong Kong Court refuses to stay a shareholder dispute petition to arbitration, finding that the substance of the dispute between the parties concerns breach of the articles and of the fiduciary duty of directors, which are governed by ordinary company law

Dickson Holdings Enterprise Co Ltd v Moravia CV and Others [2019] HKCFI 1424

5.    Court appointed provisional liquidators to Hua Han Health Industry Holdings Ltd, noting significant grounds for concern about the Company, and its operation and management over recent historical periods

Cypress House Capital Ltd v Hua Han Health Industry Holdings Ltd [2019] HKCFI 1826

6.    The Privy Council upheld the decisions of the Cayman Islands Grand Court and Court of Appeal in finding that certain redemption payments received by Skandinaviska Enskilda Banken AB (Publ) from Weavering Macro Fixed Income Fund Ltd shortly prior to the Company’s liquidation constituted voidable preferences

Skandinaviska Enskilda Banken AB v Conway & Shakespeare (as joint official liquidators of Weavering Macro Fixed Income Fund Ltd) (Cayman Islands) [2019] UKPC 36

7.    English Court of Appeal allowed damages in addition to setting aside void disposition in insolvency

Ahmed and others v Ingram and another [2018] EWCA Civ 519

8.    Arbitration or Winding up? Lasmos and But Ka Cho considered by the High Court

Re Golden Oasis Health Ltd [2019] HKCFI 2173

Cross-border Insolvency Cases

9.    English High Court held that section 236 of the Insolvency Act 1986 (the private examination provision) has extraterritorial effect

Philp Stephen Wallace (as Liquidator of Carna Meats (UK) Limited) v George Wallace [2019] EWHC 2503 (Ch)

10. Singapore Court of Appeal set out the test for recognising a foreign bankruptcy order

Re Heince Tombak Simanjuntak & 2 Ors [2019] SGHC 216

Restructuring Cases

11.  Modifications to a scheme and scheme document are unobjectionable, if the modifications are either sufficiently explained prior to a scheme meeting, or if at the scheme meeting they are sufficiently minor

Re The Hong Kong Building and Loan Agency Ltd [2019] HKCFI 2088

Corporate Disputes Cases

12.  Singapore Court of Appeal rejected the suggestion that third-party offers invariably represent the “best evidence” of the shares’ fair market value

Abhilash s/o Kunchian Krishnan v Yeo Hock Huat and another [2019] SGCA 14

13.  Court of Appeal upheld that reasons are not required for the removal of a director

Yeung Bing Kwong Kenneth v Mount Oscar Ltd [2019] HKCA 688

14.  The Court has power to grant interim payment order under ss.724 and 725 of the Companies Ordinance (Cap 622)

Xu Liu Chun v Wu Chang Jiang and Another [2019] HKCA 975

15.  Moulin director found to be in breach of her duty to exercise care and skill in performing her roles, as she failed to enquire and investigate in the face of red flags

Moulin Global Eyecare Holdings Ltd v Lee Sin Mei Olivia [2019] 3 HKLRD 833

16.  English High Court held directors’ liability as to unlawful distribution is fault-based rather than strict

Burnden Holdings (UK) Limited (In Liquidation), Stephen John Hunt (as Liquidator of Burnden Holdings (UK) Limited) v Gary John Fielding, Sally Anne Fielding [2019] EWHC 1566 (Ch)

17.  Proving dishonesty and “blind-eye knowledge” in fraud-related causes of action against bank creditor

Re Galleria (Hong Kong) Limited [2019] HKCFI 1877

Bankruptcy Cases

18.  Is arbitration clause an absolute bar to winding-up petition? – The latest position after the Lasmos case

But Ka Chon v Interactive Brokers LLC [2019] HKCA 873

19.  Court ordered co-trustee be removed where it is clear that the working relationship between the joint and several trustees has completely broken down

Tsim Che Kong v Kwok Kwan Ying [2019] HKCFI 1822

20.  Court held that it is not right to invoke section 29 of the Bankruptcy Ordinance, where no assets can be recouped to enhance the value of the bankruptcy estate

The Joint and Several Trustees of the Property of So Ching Wan v Assen Ltd (in liquidation) and others [2019] HKCFI 1491

21.  Material non-disclosure in applying for an order for substituted service of the bankruptcy petition could result in the bankruptcy order being annulled

Re Sung Sze Yin Daniel [2019] HKCFI 2264

22.  The general fitness of a trustee in bankruptcy is a disciplinary matter. It is not open to the Official Receiver to apply administrative actions to suspend the trustee’s practice without invoking the disciplinary proceedings

Re Chan John Loong Fai [2019] HKCFI 1886

23.  In determining whether a creditor is a secured creditor in the context of the bankruptcy legislation, the Court shall look at whether their security would benefit the general bankruptcy estate if it was surrendered

Promontoria (Chestnut) Limited v Charles Phelan Bell, Angela Bell [2019] EWHC 1581 (Ch)

24.  English High Court found a second application brought by a bankrupt to annul his bankruptcy an abuse of process where the first application had been struck out for the bankrupt’s failure to comply with court directions

Philip John Lambert v Forest of Dean District Council, Andrew James Nichols, John William Butler [2019] EWHC 1763 (Ch)