Re Trina Solar Ltd

• Jurisdiction: Cayman Islands
• Judge: Mr. Justice Segal
• Judgment Date: 06 November 2017
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO. FSD 92 OF 2017 (NSJ)
• Date: 06 November 2017

In the Matter of the Companies Law (2016 Revision)

And in the Matter of Trina Solar Limited

Before:

The Hon. Mr. Justice Segal

CAUSE NO. FSD 92 OF 2017 (NSJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Application for a freezing injunction — section 238 of the Companies Law (2016 Revision) — dissenting shareholders seeking a freezing injunction based on valuation opinion evidence said to establish a good arguable case that they will succeed at the trial of the section 238 petition and post-merger transactions alleged to involve real risk of dissipation — approach to determining good arguable case where there is a dispute as to the valuation evidence — meaning of “unjustified” conduct — exercise of the Court's discretion

Appearances:

Mr. Michael Todd Q.C. instructed by Rupert Bell and Patrick McConvey of Walkers on behalf of the Dissenting Shareholders

Ms Catherine Newman Q.C. instructed by Nick Hoffman and Katie Pearson of Harneys Westwood & Riegels for the Company

JUDGMENT ON THE DISSENTING SHAREHOLDERS' APPLICATION FOR A FREEZING INJUNCTION AND FOR THE APPOINTMENT OF RECEIVERS

Introduction

1. On 5 October 2017, 1 heard an application for a freezing injunction, the appointment of receivers and other consequential relief made by Maso Capital Investments Limited and Blackwell Partners LLC — Series A (the Dissenting Shareholders). The application was opposed by Trina Solar Limited (the Company).

2. Following the hearing, in accordance with permission granted by me at the hearing, the Company filed further evidence and further correspondence was sent to the Court (the last of which was filed on 10 October 2017). On 12 October 2017, I circulated to the parties a Note of Decision setting out my ruling on the application. I dismissed the application for a freezing injunction (and the other relief sought by the Dissenting Shareholders). I explained that the Note of Decision only provided an outline of my reasoning (delivered so that the parties understood as soon as possible the main points in my decision) and did not cover all matters or contain a full analysis of the evidence and legal issues, which would be set out in my full judgment. This is my full judgment on the application.

Background

3. This is the latest in a series of interlocutory applications in, and satellite litigation relating to, the petition (the Petition) presented on 9 May 2017 by the Company under section 238 of the Companies Law (2016 Revision) (the Companies Law) seeking a determination by the Court of the fair value of the Dissenting Shareholders' shares. The position can be summarised as follows:

• (a). there have been three previous applications. First, on 7 July 2017, the Company issued a summons (the Set Aside Application) seeking an order setting aside an earlier consent order, dated 21 June 2017 (the Consent Order), which Consent Order required the Company to pay interim payments to the Dissenting Shareholders by no later than 5 July 2017. Secondly, also on 7 July 2017, the Dissenting Shareholders presented a winding up petition (the Winding Up Petition) based on the Company's failure to make the interim payments. Thirdly, on 10 July 2017, the Company issued a summons seeking to strike out the Winding Up Petition (the Strike Out Application).

• (b). the Set Aside Application was made after the Company unsuccessfully sought from the Dissenting Shareholders an extension of time and variation of the Consent Order to defer the time at which interim payments had to be made (and after the date on which the interim payments were required to be made under the Consent Order). Having failed to obtain the requested extension, the Company had then asserted that it regarded the Consent Order as invalid.

• (c). following a demand for payment on 6 July 2017, the Dissenting Shareholders presented the Winding Up Petition on 7 July 2017. The Company's response was to issue the Strike Out Application on 10 July 2017.

• (d). the Set Aside Application and the Strike Out Application were listed to be heard on 17 and 18 July 2017. By agreement, and in my view correctly, the Set Aside Application was heard first on 17 July 2017 and I handed down my decision on the morning of 18 July 2017 dismissing the Set Aside Application and refusing to grant the relief sought. I held that the Consent Order had been and remained effective and in force (the order dismissing the Set Aside Application and confirming the validity of the Consent Order was dated 19 July 2017). The Company is currently seeking leave to appeal the 19 July order.

• (e). following the handing down of my decision on the Set Aside Application, the Company indicated that it intended to make the interim payments. The Strike Out Application was then heard on 18 July 2017. I reserved judgment. Subsequently the Company and the Dissenting Shareholders agreed to amend the Consent Order to provide that the interim payments must be made by 5pm on 28 July and I indicated that it seemed to me right to delay handing down my judgment on the Strike Out Application until after 28 July 2017 since it was important to know whether the debt on which the Winding Up Petition had been based had in fact been paid. I delivered my judgment on 4 August 2017 (having circulated the draft judgment on 31 July 2017) in which I ordered that the Winding Up Petition be struck out and that the Company pay the Dissenting Shareholders' costs on the standard basis (since I considered that the Company's conduct had made the presentation of the Winding Up Petition justifiable and reasonable). The Company is also currently seeking leave to appeal my costs order.

The Freezing Injunction Summons

4. On 19 September 2017, the Dissenting Shareholders issued a summons (the Freezing Injunction Summons) seeking a worldwide freezing injunction in respect of the assets of the Company up to a value of US$184,829,568, the appointment of receivers over assets of the Company and a disclosure order. The limit to be included in the freezing injunction was the difference between what the Dissenting Shareholders claimed to be the likely fair value of the Dissenting Shareholders' shares in the Company (US$204,990,160) and the interim payments (US$20,150,592) paid by the Company to the Dissenting Shareholders.

5. The Freezing Injunction Summons when issued was supported by the Second Affidavit of Mr Manoj Jain (Mr Jain) and the First Affirmation of Ms Rose Kehoe (Ms Kehoe). In accordance with directions made by me (in the absence of any agreement between the parties) the Company filed evidence in opposition in the form of a Second Affidavit of Mr Scott Davidson (Mr Davidson), a First Affirmation of Mr Lou Weiliang (Mr Weiliang) and the Second Affidavit of Mr Shuion Chan (Mr Chan) and the Dissenting Shareholders filed evidence in reply in the form of the Second Affirmation of Ms Kehoe and a Third Affidavit of Mr Jain sworn in response to Mr Chan's Second Affidavit. At the hearing of the Freezing Injunction Summons I gave the Company permission to provide further written details and a confirmation of or to adduce further evidence as to the terms governing the restructuring transactions and the conduct said to amount to dissipation about which the Dissenting Shareholders complained. Pursuant to this permission a further (the third) affidavit was filed by Mr Chan (Mr Chan's Third Affidavit).

6. Following the hearing, and without permission to do so, the Dissenting Shareholders filed a further affidavit, being the First Affidavit of Michaela Chi-Yan Lam of Walkers (Walkers are the Dissenting Shareholders' attorneys). On 6 October 2017, Walkers informed the Court by email that, according to the Accounting and Corporate Regulatory Authority in Singapore, the Company had transferred its 100% shareholding in Trina Solar (Singapore) Pte. Ltd. (Trina Singapore) to Trina Solar Energy Development Pte. Ltd. (Trina Energy Singapore) on 5 October 2017, the day of the hearing. Ms Lam's affidavit exhibited the results of a search of the register of members of Trina Singapore maintained by the Accounting and Corporate Regulatory Authority in Singapore showing the transfer. Walkers argued that this was material new information which they needed and were entitled to put in evidence after the hearing and which was inconsistent with statements made in the skeleton argument of the Company's legal advisers (Ms Newman Q.C. and Harneys Westwood & Riegels (Harneys)) prepared for the hearing and further demonstrated misconduct by the Company. Paragraph 23 of the Company's skeleton argument had stated that:

“There is no evidence whatsoever to suggest that Trina, now controlled by Fortune Solar Limited, another Cayman company, intends to make any further transfers of its remaining subsidiaries for any purpose, still less dissipatory transfers. There is no evidence or fact based allegation that it intends to do anything improper with its remaining assets: it does not.”

In response the Company's attorneys, Harneys, objected to the filing of Ms Lam's affidavit (in the absence of an application for leave and the granting of permission to serve further evidence after the hearing) and asked the Court to ignore it. They also said that while paragraph 23 appeared to be incorrect the error was inadvertent (and Ms Newman Q.C. helpfully wrote to the Court to confirm the position) and Walkers' complaint was wholly without foundation since it had been clear to the Dissenting Shareholders before and at the hearing that further steps in the restructuring process were in the course of being and would continue to be completed. I did read Ms Lam's affidavit but took the view that it did not deal with any material new evidence and therefore even if admissible would not affect my decision. The transfer of the Company's shares in Trina Singapore was contemplated by the evidence filed for the purpose of the...