SHAGANG SHIPPING CO LTD v. GRAND CHINA SHIPPING (HONG KONG) CO LTD (in liquidation)

SHAGANG SHIPPING CO LTD v. GRAND CHINA SHIPPING (HONG KONG) CO LTD (in liquidation)

The court appointed Mr Lai and Mr Haughey (Deloitte) as joint and several liquidators because the majority creditors supported their appointment and no real (as opposed to theoretical) conflict of interest was demonstrated; however, to preserve confidence in the investigation, the court ordered a re-election of the committee of inspection to ensure a majority of members independent of Bulk Triumph/HNA Group/CLC Creditors, and directed inquiries and provisional conditions regarding Deloitte's prior engagements with HNA/China Development Bank.

Citation
SHAGANG SHIPPING CO LTD v. GRAND CHINA SHIPPING (HONG KONG) CO LTD (in liquidation)
Parties
Petitioner: Shagang Shipping Company Limited; Respondent (company): Grand China Shipping (Hong Kong) Company Limited (in liquidation); Provisional Liquidators / Joint and Several Liquidators: Wong Sun-keung and Tsui Mei-yuk (provisional liquidators)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
6 November 2013
Case Number
HCCW485/2012
Procedural Posture
Companies (winding Up) Proceedings / Hearing and Decision on Appointment of Liquidators and Committee of Inspection Following Provisional Liquidators' Summons
Outcome
Appointed Mr Lai and Mr Haughey as joint and several liquidators; ordered further creditors' meeting to reconstitute committee of inspection with an independent majority; costs nisi that provisional liquidators' costs be paid from company assets; directed inquiries into Deloitte's prior engagements and granted...
Legal Topics
Liquidator Appointment, Committee of Inspection, Conflicts of Interest, Creditors' Meeting, Costs
Source Language
EN
Insolvency Company Law Civil Procedure Liquidator Appointment Committee of Inspection Conflicts of Interest Creditors' Meeting Costs

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Parties

Shagang Shipping Company Limited

Petitioner

Grand China Shipping (Hong Kong) Company Limited (in liquidation)

Respondent (company)

Wong Sun-keung and Tsui Mei-yuk (provisional liquidators)

Provisional Liquidators / Joint and Several Liquidators

Procedural Posture

Companies (winding Up) Proceedings / Hearing and Decision on Appointment of Liquidators and Committee of Inspection Following Provisional Liquidators' Summons

Legal Issues

  1. 1 Whether the court should appoint liquidators nominated by the majority of creditors despite objections
  2. 2 Whether Deloitte (Mr Lai and Mr Haughey) have a real conflict of interest or such a perception of conflict that justifies departing from creditors' choice
  3. 3 Proper composition of the committee of inspection to ensure independent oversight

Ratio Decidendi

The court appointed Mr Lai and Mr Haughey (Deloitte) as joint and several liquidators because the majority creditors supported their appointment and no real (as opposed to theoretical) conflict of interest was demonstrated; however, to preserve confidence in the investigation, the court ordered a re-election of the committee of inspection to ensure a majority of members independent of Bulk Triumph/HNA Group/CLC Creditors, and directed inquiries and provisional conditions regarding Deloitte's prior engagements with HNA/China Development Bank.

Court Disposition

Appointed Mr Lai and Mr Haughey as joint and several liquidators; ordered further creditors' meeting to reconstitute committee of inspection with an independent majority; costs nisi that provisional liquidators' costs be paid from company assets; directed inquiries into Deloitte's prior engagements and granted...

Orders

  • Appoint Mr Lai and Mr Haughey as joint and several liquidators of Grand China Shipping (Hong Kong) Company Limited.
  • Order a further meeting of creditors to vote upon members of the committee of inspection such that the committee has not less than five and not more than seven members and the majority are creditors other than Bulk Triumph, companies forming part of the HNA Group and the CLC Creditors.