The Companies Act (2021 Revision) and Jian Ying Ourgame High Growth Investment Fund (in Provisional Liquidation)

• Jurisdiction: Cayman Islands
• Judge: Justice David Doyle
• Judgment Date: 16 September 2021
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO: FSD 90 OF 2021 (DDJ)

In the Matter of the Companies Act (2021 Revision)

And in the Matter of Jian Ying Ourgame High Growth Investment Fund (In Provisional Liquidation)

Before:

The Hon. Justice David Doyle

CAUSE NO: FSD 90 OF 2021 (DDJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Companies Act s.92(c) — circumstances in which a company may be wound up by the Court — the period, if any, fixed for the duration of the company by the articles of association expires, or whenever the event, if any, occurs, upon the occurrence of which it is provided by the articles of association that the company is to be wound up.

Companies Act s.92 (e) — circumstances in which a company may be wound up by the Court — the Court is of opinion that it is just and equitable that the company should be wound up.

Appearances:

Ms Shelley White and Mr William Waldron of Walkers on behalf of the Petitioner

Ms Harriet Ter-Berg of Walkers on behalf of the Joint Provisional Liquidators

IN OPEN COURT

Introduction

1 There is before the Court an application to discharge the provisional liquidation and to place Jian Ying Ourgame High Growth Investment Fund (the “Fund”) into official liquidation. I have read the bundles put before the Court and the 34 page skeleton argument filed on behalf of Kinetic Creations Global Limited (the “Petitioner”).

2 My reading was focused on:

• (a) the winding up petition dated 9 April 2021 (the “Petition”);

• (b) the judgment of Segal J dated 11 August 2021 (the “Injunction Judgment”);

• (c) the short fourth affidavit of William Waldron sworn on 27 August 2021 and exhibit WW-4 exhibiting the notice of this hearing in the Cayman Compass on Friday 27 August 2021 and the South China Morning Post on Friday 27 August 2021;

• (d) the first report of the joint provisional liquidators of the Fund dated 7 September 2021 (the “JPLs” and the “JPLs Report” respectively); and

• (e) the affirmations of Qian Zhiyi sworn on behalf of the Petitioner.

The relief sought

3 In essence, the Petitioner seeks the discharge of the Order of Segal J dated 2 July 2021, and an order that:

• (a) the Fund be placed into official liquidation; and

• (b) the JPLs be appointed as the Joint Official Liquidators (“JOLs”) of the Fund.

4 The application for the winding up order is made pursuant to:

• (a) section 92 (c) of the Companies Act (2021 Revision) (the “ Companies Act”) on the ground that the period of the Fund as set out in the articles has expired; and/or

• (b) section 92 (e) of the Companies Act on the ground that it is just and equitable that the company be wound up.

No opposition

5 No notice of appearance has been received from anyone and no one has appeared to oppose the relief sought by the Petitioner. The application is made with the agreement and support of the JPLs and all procedural requirements in respect of the winding up of the Fund pursuant to the Petition have been met.

Appearances

6 Ms Shelley White and Mr Will Waldron appear on behalf of the Petitioner, and Ms Ter-Berg appears on behalf of the JPLs. I am grateful to all Counsel for their considerable assistance to the Court.

Developments and background

7 I note all the developments since the presentation of the Petition. The Petition was presented by the Petitioner in its capacity as a contributory. Segal J in the Injunction Judgment refers to the Fund being established for a limited term (the “Fund Term”) subject to the extension of the term by agreement amongst the shareholders.

8 The initial Fund Term was for one year ending 20 December 2018 and was subsequently extended to 20 December 2019.

9 I note the background in respect of:

• (a) the application for the appointment of the JPLs;

• (b) the validation application;

• (c) the appointment of the JPLs;

• (d) the JPLs' urgent injunction application; and

• (e) the receivership application culminating in an order being made on 2 September 2021.

Grounds for winding up

10 I am satisfied that the grounds for winding up have been established.

Section 92(c) of the Companies Act — if the period of the duration of the Fund stated in the articles expires.

11 I have considered Re Duet Real Estate Partners 1 LP (FSD 22 of 2020 (IKJ), unreported, Kawaley J, 9 June 2020). At paragraph 35, Kawaley J in effect stated that once a petitioner under section 92(c) of the Companies Act establishes that the duration of the legal entity has expired the following additional standing requirements will usually have to be met:

• (a) showing that there is a tangible and practical need for the winding up; and

• (b) showing that there is no more appropriate remedies that the petitioner should be left to pursue as an alternative to a winding up order under section 92(c) of the Companies Act.

12 Under the terms of the Articles, the term of the Fund expired on 20 December 2019, nearly two years ago now. The Fund has had plenty of time to effect an informal wind down. The Petitioner has been kept out of its money for significantly longer than it ever agreed to under the Articles and the Fund documentation.

13 I have considered Article 40.1 and the definitions in the Articles, supplemented by the definition of ‘Fixed Term’ in the Private Placement Memorandum dated February 2019. Extended Term 1 expired on 20 December 2019, and the Petitioner did not consent to the extension of the Fund to Extended Term 2, and in any event, Extended Term 2 would have expired on 20 December 2020, nine months ago now.

14 Moreover I accept the submission of Ms White that in effect Article 40.1 trumps Article 41.1.

Section 92(e) of the Companies Act — the Fund may be wound up if the Court is of the opinion that it is just and equitable that the fund should be wound up

15 I...