RE THE JOINT AND SEVERAL LIQUIDATORS OF CEFC SHANGHAI INTERNATIONAL GROUP LIMITED (IN LIQUIDATION IN THE MAINLAND OF THE PEOPLE’S REPUBLIC OF CHINA)

RE THE JOINT AND SEVERAL LIQUIDATORS OF CEFC SHANGHAI INTERNATIONAL GROUP LIMITED (IN LIQUIDATION IN THE MAINLAND OF THE PEOPLE’S REPUBLIC OF CHINA)

The Court held that the Mainland liquidation satisfied the established criteria for recognition (collective proceedings in the place of incorporation) and that recognition and assistance should be granted in conventional terms; accordingly the Joint and Several Liquidators were recognised and given specified powers in Hong Kong and proceedings against the Company in Hong Kong were stayed except with leave, thereby protecting Hong Kong assets from enforcement including the pending garnishee and aligning with modern cross‑border insolvency principles rather than the narrow relation‑back reasoning in Galbraith v Grimshaw.

Citation
[2020] HKCFI 167
Parties
Applicants / Foreign Administrators: Joint and Several Liquidators of CEFC Shanghai International Group Limited (King & Wood Mallesons (Shanghai Office); Shanghai Fangda Partners; Shanghai AllBright Law Offices); Debtor (in Liquidation in the Mainland Prc): CEFC Shanghai International Group Limited; Creditor / Enforcement Applicant (obtained Default Judgment and Garnishee Order Nisi): Right Time Global Investment SPC-Right Time Value Investment Fund SP; Hong Kong Subsidiary / Garnishee Debtor: Shanghai Huaxin Group (Hong Kong) Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
13 January 2020
Case Number
HCMP2295/2019
Procedural Posture
Recognition and Assistance of Foreign Insolvency Proceedings (mainland Liquidation) / Chambers Application for Urgent Recognition and Assistance and Interlocutory Protection (stay/adjournment of Garnishee)
Outcome
Application granted — recognition and assistance order made in conventional terms recognising the Joint and Several Liquidators and granting specified powers and a stay on proceedings subject to leave
Legal Topics
Recognition and Assistance, Garnishee Proceedings, Stay of Proceedings, Pari Passu Distribution, Relation‑back
Source Language
EN
Insolvency Cross Border Insolvency Civil Procedure Public International Law Recognition and Assistance Garnishee Proceedings Stay of Proceedings Pari Passu Distribution +1 more

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Parties

Joint and Several Liquidators of CEFC Shanghai International Group Limited (King & Wood Mallesons (Shanghai Office); Shanghai Fangda Partners; Shanghai AllBright Law Offices)

Applicants / Foreign Administrators

CEFC Shanghai International Group Limited

Debtor (in Liquidation in the Mainland Prc)

Right Time Global Investment SPC-Right Time Value Investment Fund SP

Creditor / Enforcement Applicant (obtained Default Judgment and Garnishee Order Nisi)

Shanghai Huaxin Group (Hong Kong) Limited

Hong Kong Subsidiary / Garnishee Debtor

Procedural Posture

Recognition and Assistance of Foreign Insolvency Proceedings (mainland Liquidation) / Chambers Application for Urgent Recognition and Assistance and Interlocutory Protection (stay/adjournment of Garnishee)

Legal Issues

  1. 1 Whether a Mainland (PRC) liquidation qualifies for recognition and assistance by the Hong Kong Court at common law
  2. 2 Whether the Court should decline to make a garnishee order nisi absolute where such nisi was served before but enforced against assets after commencement of foreign insolvency proceedings
  3. 3 Scope of powers and relief that may be granted to foreign administrators in Hong Kong consistent with Hong Kong law and public policy

Ratio Decidendi

The Court held that the Mainland liquidation satisfied the established criteria for recognition (collective proceedings in the place of incorporation) and that recognition and assistance should be granted in conventional terms; accordingly the Joint and Several Liquidators were recognised and given specified powers in Hong Kong and proceedings against the Company in Hong Kong were stayed except with leave, thereby protecting Hong Kong assets from enforcement including the pending garnishee and aligning with modern cross‑border insolvency principles rather than the narrow relation‑back reasoning in Galbraith v Grimshaw.

Court Disposition

Application granted — recognition and assistance order made in conventional terms recognising the Joint and Several Liquidators and granting specified powers and a stay on proceedings subject to leave

Orders

  • The appointment of King & Wood Mallesons (Shanghai Office), Shanghai Fangda Partners and Shanghai AllBright Law Offices as the Joint and Several Liquidators of CEFC Shanghai International Group Limited (with authorised representatives) is recognised by this Court
  • The Joint and Several Liquidators are authorised to exercise in Hong Kong the powers set out in the order, including to request documents and information, locate and take control of assets and books, secure bank balances, open/operate bank accounts, retain professionals, bring proceedings in Hong Kong and seek...