Muhammad Ziaullah Khan Chishti v Afiniti, Ltd

• Jurisdiction: Bermuda
• Judge: Kawaley, J.A.
• Judgment Date: 05 May 2025
• Neutral Citation: BM 2025 CA 10
• Year: 2025
• Docket Number: 2024: No. 265
• Court: Court of Appeal (Bermuda)

Muhammad Ziaullah Khan Chishti

and

Afiniti, Ltd.

Kawaley, J.A.

2024: No. 265

Court of Appeal

Appearances:

Ms. Siobhan Boys, Carey Olsen, for the Applicant/Intended Appellant.

REASONS FOR REFUSAL OF LEAVE TO APPEAL

BACKGROUND

Kawaley, J.A.

1 By a Judgment dated 20 November 2024, Martin, J. (the “Judge”) granted the Plaintiff/Intended Respondent (in provisional liquidation for restructuring purposes) (the “Company”) the Sanctions sought in relation to a proposed Restructuring agreement with the Plaintiff's Secured Lenders (the “Sanctions Ruling”). The application was heard over two days, and the Sanctions Ruling ran to 41 pages.

2 The Applicant applied to the Judge for leave to appeal against that decision. On 21 March 2025, the Judge refused that application for the reasons set out in a reserved Ruling.

3 By a Notice of Motion dated 28 March 2025, the Applicant applied to this Court for leave to appeal against the 20 November 2024 Ruling and Order. The application was dealt with by me as a Single Judge of the Court of Appeal. I refused leave on 4 April 2025.

4 These are the reasons for my 4 April 2025 decision.

THE SUPREME COURT DECISIONS

5 The Sanctions Ruling explains that the Company was placed in provisional liquidation for restructuring purposes to restructure its debt (which was primarily secured) and shareholding by transferring its undertaking to a new company and reorganising the existing debt and shareholding (the “Transaction”).

6 The Company is the ultimate holding company of a group of 32 companies engaged in the artificial intelligence business and was founded by the Applicant. In November 2021, he was forced to resign as Chairman, and the Company's fortunes were further damaged by market conditions in 2022. In 2024 the resultant “liquidity and leverage crisis” caused the Company to negotiate the Transaction with the Secured Lenders. Teneo FA provided a Valuation Report, and Michael Morrison and Charles Thresh were appointed as Joint Provisional Liquidators (“JPLs”) on 19 September 2024. The JPLs applied for the Sanctions Order on 2 October 2024 and considered that the Transaction was in the best interests of the Company's creditors overall (including trade creditors and employees.

7 The Applicant opposed the application on the grounds that the Transaction prejudiced his rights (as a contingent creditor) under the Indemnity Agreement previously entered into between himself and the Company. The Transaction was approved both as a “Type 1” compromise under section 175(1)(e) of the Companies Act 1981 (where a sanction was required) and as a “Type 2” sale under section 175(2)(a) (where a sanction was not required but was sought on the grounds of it being a “momentous” transaction).

8 The decisions made by the Judge most relevant to the four grounds of appeal, which form the subject of the application for leave to appeal to...