Re Z-OBEE Holdings Ltd

• Jurisdiction: Bermuda
• Judgment Date: 21 February 2017
• Date: 21 February 2017
• Docket Number: Commercial Jurisdiction 2016 No 183
• Court: Supreme Court (Bermuda)

[2017] Bda LR 19

In The Supreme Court of Bermuda

Commercial Jurisdiction 2016 No 183

In the Matter of Z-OBEE Holdings Limited

Ms L Zuill for the Petitioner

The following cases were referred to in the judgment:

Re Up Energy Development Group LtdBDLR [2016] Bda LR 94

Re Titan Petrochemicals LtdBDLR [2013] Bda LR 76

Re Legend International Resorts Ltd [2006] HKLRD 192

Winding-up — Petition by company — Appointment of joint provisional liquidators to monitor implementation of insolvent restructuring by board of directors — Jurisdiction to utilise provisional liquidation proceedings in aid of restructuring which will result in petition being dismissed

JUDGMENT of Kawaley CJ

Background

1. The Petitioner is a Bermuda company which was listed on the Hong Kong Stock Exchange (‘HKSX’). The Company has been in provisional liquidation since June 27, 2014 in the High Court of the Hong Kong Special Administrative Region (‘the Hong Kong Court’). Although there are wrinkles to be straightened out concerning its HKSX listing status, the Hong Kong joint provisional liquidators (‘JPLs’) have found a potential “white knight” investor and seek to have the Company restructured rather than wound up.

2. On February 7, 2017, the Company presented its own insolvency-based winding-up petition which has yet to be heard. By an Ex Parte Summons issued on February 9, 2017, the Company applied to appoint the Hong Kong JPLs as Bermuda JPLs for the explicit purpose of restructuring the Company. It was explained to the Court in the supporting evidence that an important reason for the application was the inability of the Hong Kong Court to use provisional liquidation proceedings for restructuring purposes. It was submitted that the Bermuda Court had an established practice of appointing JPLs to manage a restructuring. If the application was granted, it was anticipated that the present Hong Kong winding-up proceedings would be discontinued and that the Bermuda JPLs would apply to this Court in the primary liquidation proceedings for the issue of a Letter of Request to the Hong Kong Court for assistance in the form of promoting a parallel scheme of arrangement in Hong Kong, serving as the ancillary liquidation forum, to the scheme the JPLs would seek to implement in Bermuda.

3. The evidence disclosed that substantial creditor support existed for the proposed restructuring. It was also deposed that at a hearing on February 13, 2017 in Hong Kong, Jonathan Harris J of the High Court adjourned the Hong Kong Petition to enable the Hong Kong JPLs to make the present application.

4. On February 17, 2017 I granted the relief sought by the Company on its Ex Parte Summons and appointed Messrs Man Chun So, Donald Edward Osborn and Yat Kit Jong as JPLs. I now give brief reasons for this decision.

Statutory provisions

5. Section 170 of the Companies Act 1981 provides as follows:

‘Power of Court to appoint liquidators

170 (1) For the purpose of conducting proceedings in winding up a company and performing such duties in reference thereto as the Court may impose, the Court may appoint a liquidator or liquidators.

(2) The Court may on the presentation of a winding-up petition or at any time thereafter and before the first appointment of a liquidator appoint a provisional liquidator who may be the Official Receiver or any other fit person.

(3) When the Court appoints a provisional liquidator, the Court may limit his powers by the order appointing him.’ [Emphasis added]

6. This provision has for almost 20 years been construed as empowering this...