RE AETHER LTD

HCCW 397/2020 [2021] HKCFI 1695

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE COMPANIES WINDING-UP PROCEEDINGS NO 397 OF 2020 ____ IN THE MATTER of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) and IN THE MATTER of Aether Limited （以太有限公司） ____ Before: Hon Harris J in Court Date of Hearing: 7 June 2021 Date of Decision: 7 June 2021 ____

D E C I S I O N ____ On 19 April 2021 I heard the petition and adjourned it to 7 June 2021 for the reasons set out in my decision of 19 April 2021. In [8] I say this: “Mr Lim has also deposed to his expectation, which I assume is based on his familiarity with the matter and is genuine, negotiations being concluded in order that a drawdown should be possible by the end of May of this year. It seems to me that this is sufficiently precise and the timeline suggested by Mr Lim sufficiently close to the current date to justify the court exercising its discretion to adjourn the petition in order to allow the Company the opportunity to settle the Petitioner’s debt out of the money to be drawn down if the loan is concluded. I am not satisfied that the rather vaguer proposal relating to the realisation of the value of its interest in property in Beijing is. I will, therefore, tie the adjournment closely to the success of the loan. It is for this reason that I have adjourned the petition until 7 June 2021. If the loan has not been concluded by the time the petition is brought on before me, the Company should expect to be wound up unless it is able to produce a rather more compelling story demonstrating its ability to restructure its debt by realising its interests in the Beijing property than it has been done in the evidence currently before me.” As can be seen, my decision

to adjourn the petition was largely tied to evidence which suggested that there was a realistic prospect of a loan being obtained which would allow the settlement of the Petitioner’s debt. That loan was to come from Apollo Asia Management LLP. The loan was not concluded. The position today is that the Company has asked for a further adjournment in order to allow it to obtain finance from two alternative sources. One is a member of the China Resources Group. The other is Oaktree Capital Management. The precise details of the state of negotiations to obtain finance from those two sources are not significant for the purposes of today’s hearing. It will suffice to say that in both cases, the documents that have been signed are non-binding term sheets. What the opposing contributory, who seeks an adjournment, has proposed is that the petition be adjourned until early September on the basis that the Petitioner will be paid the principal and interest due to it as at 6 September 2021 in full along with the costs of the proceedings. For that payment to be feasible, one or other of the two prospective new financing arrangements would have to be concluded. If they are not, the Company will be put into liquidation. The Petitioner is not persuaded that the proposal is in its best interests and seeks an immediate winding up. The competing arguments largely centre on the following matters.

The Petitioner has no confidence in Mr Lim being able to finalise the arrangements, he is discussing with the two companies to which I have referred. It believes that the appointment of liquidators will result in it being more likely that the value of the project in Beijing is realised to its benefit than allowing either Mr Lim to continue with his attempts to raise new finance or that the current receivers that have been appointed over the relevant interest in the Beijing project, being more successful than they have been to date in realising the project’s value. On behalf of Mr Lim, Mr Ho argued that first there is no particular reason to think that a liquidator would be any more successful than the receivers have been, and therefore, there was not any immediate reason to anticipate the Petitioner’s position being improved by an immediate winding up order. Secondly, it is Mr Lim’s position that the Company is balance sheet solvent, and Mr Ho argued that Mr Lim therefore, has a legitimate interest in the maintenance of the Company’s enterprise value. There are no supporting or opposing creditors to the petition. It seems to me that ultimately the decision that I have to make is a practical, commercial one. The Petitioner is a sophisticated asset management company. Mr Lim has already been given one opportunity to try and rescue the project and has been unsuccessful. It seems

to me in the circumstances the correct approach by the court is to be guided by the view of the Petitioner of what is in its best financial interests unless there is a fairly compelling reason to do otherwise. I am not satisfied that there is. I will, therefore, make the normal winding up order. (Jonathan Harris) Judge of the Court of First Instance High Court Ms Eva Sit SC and Ms Jasmine Cheung, instructed by Allen & Overy, for the petitioner The company was not represented and did not appear Mr Look Chan Ho, instructed by Sidley Austin, for the opposing contributory (CBD Aether Center Ltd) Mr Raymond Kong, instructed by the Official Receiver’s Office, for the Official Receiver