The Companies Act (2023 Revision) and MTBL Global Fund
| Jurisdiction | Cayman Islands |
| Judge | Mr Justice Segal |
| Judgment Date | 28 March 2024 |
| Docket Number | CAUSE NO FSD 268 of 2023 (NSJ) |
| Court | Grand Court (Cayman Islands) |
The Hon. Mr Justice Segal
CAUSE NO FSD 268 of 2023 (NSJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Application to restore company to the register and to make a winding up order on restoration – the petitioner had previously brought proceedings against the company in Singapore – the company was struck off thereby preventing the petitioner from continuing those proceedings – the company's management failed to take steps to restore the company to the register – the petitioner sought restoration to enable it to continue the proceedings and a winding up order to ensure that company would not be struck off again – the company's management did not oppose the relief sought — whether the petitioner had standing to present the winding up petition and whether a winding up order should be made in the circumstances particularly where the petitioner's claims were disputed in the Singapore proceedings and having regard to the need to avoid a winding up order stifling the company's defence of those proceedings
Tom Lowe KC with Andrew Jackson and Will Porter of Appleby for the Petitioner
This is the hearing of the Amended Petition dated 4 March 2024 (the Amended Petition) presented by AI MTBL SPV, LLC (the Petitioner) against MTBL Global Fund (the Company). At the hearing, Mr Tom Lowe KC appeared for the Petitioner. The Company, which as I shall explain has been struck off, its fund manager and former director were not represented.
The Petitioner applies as a creditor of the Company for the following orders, which are sought pursuant to sections 159 and 94 of the Companies Act (2023 Revision) (the Act) and GCR O.102, r.18:
-
(a). that the Company be restored to the Register of Companies;
-
(b). that the Company be wound up by the Court; and
-
(c). that Ms Angela Barkhouse and Mr Luke Furler be appointed as joint official liquidators ( JOLs) of the Company.
The filing of the Amended Petition follows a hearing of the original petition dated 7 September 2023 before the me on 26 October 2023 (the October Hearing) and the making of an order of the same date (the October Order). I was not at that stage prepared to make the orders sought by the Petitioner as I was concerned to ensure that proper notice of the original petition and the hearing had been given to the Company's management (prior to the Company being struck-off) and gave directions for further steps to be taken to give notice to management in Singapore. It appears that notice has now been given to these parties. A copy of the notice of hearing giving details of this hearing together with the Petitioner's evidence filed for the purpose of the hearing was sent on Friday 8 March 2024 to the legal advisers in Singapore to the Company's fund manager and to the individual who before the Company was struck-off was the Company's director and held all the management shares in the Company, Mr. Sun (Joe) Quan ( Mr. Sun). They had also previously been sent copies of all other documents filed in these proceedings. However, neither Mr. Sun nor the fund manager have applied to oppose or made any representations (or had any communications with the Court) regarding the relief sought by the Petitioner.
In support of the Amended Petition the Petitioner has adduced evidence from Mr Lawrence Cutler. He is an authorised representative and signatory of the Petitioner. He has provided four affirmations. Further affidavits were also filed giving evidence of service, procedural matters and correspondence relating to certain proceedings in Singapore (discussed below).
The Company was incorporated and registered on 20 July 2017 and registered as a mutual fund on 6 October 2017. Mr. Sun, who is a Chinese national and a Singapore Permanent Resident, holds all the management shares in, and was prior to the strike-off a director of, the Company. China Capital Impetus Asset Management Pte. Ltd (the Fund Manager) was the fund manager of the Company (and is incorporated in Singapore). Mr. Sun is the CEO of the Fund Manager.
In May 2021, the Petitioner subscribed for 146.3028 Series 1 Class D participating shares (the Class D Shares) in the Company on the terms set out in various documents. These included a subscription agreement dated 6 May 2021; a side letter dated 6 May 2012; a side letter dated 25 May 2021 (the Second Side Letter); a confidential information memorandum dated February 2021 and the Third Amended and Restated Articles of Association adopted on 26 March 2020 (the Articles).
Under the Second Side Letter the Company agreed to distribute US$8,411,000 (the Tranche A Distribution) by 8 August 2021 and to pay by the effective date US$25 million less any sums already paid in respect of the Tranche A Distribution (the Return Amount). The Company was also required to effect a redemption of all the Class D Shares held by the Petitioner “ (i) immediately (and in any event no later than two (2) Business Days) after an Event of Default has occurred, or the Investor notifies the Fund in writing of a Potential Event of Default or (ii) before the first anniversary of the Effective Date.” The Petitioner says that the effective date was 25 May 2021 (so that the first anniversary was 25 May 2022). In addition, the Second Side Letter provided that failure by the Company to effect this redemption would entitle the Petitioner to assume control of the Company by terminating the appointment by the Company of the Fund Manager; effecting a transfer to itself of all management shares held by the Fund Manager; replacing the Company's director(s) with its own and taking any further necessary steps, including in respect of any regulatory matters.
On 12 August 2021 the Petitioner submitted a redemption request to the Company for the redemption of US$8,411,000 of the Class D Shares. On 19 October 2021 the Company paid the Petitioner US$1 million leaving US$7,411,000 outstanding. On 14 December 2021 the Petitioner served a statutory demand on the Company in respect of that redemption request.
The parties subsequently negotiated a settlement agreement. On 23 December 2021 the Petitioner, the Company, Mr Sun and Lecca Group Pte Ltd ( Lecca) entered into the Framework Agreement (the Framework Agreement). The settlement in the Framework Agreement was conditional on the Petitioner submitting a redemption form (request) in respect of all is remaining Class D Shares (which as I understand it, it did).
The Framework Agreement is a complex document (as the Company acknowledges in its defence in the Singapore proceedings at [21(m)]). It was governed by Singapore law and contained an exclusive jurisdiction clause requiring that disputes be determined by the Singapore courts. Under its terms, the Company and Lecca agreed, in some cases subject to the satisfaction of certain conditions, to pay sums to the Petitioner in discharge of the Company's outstanding liabilities. As Mr Lowe KC explained, the Framework Agreement was designed to allow the Company to dispose of its assets and pay sums to the Petitioner out of the proceeds of sale. The Company in its defence in the Singapore proceedings said that the Framework Agreement “ set out a framework for the repayment of a total fixed sum of US$24million” (see [21(f)]).
The Company agreed to procure that its subsidiary AEI Corporation Ltd ( AEI) would purchase (and enter definitive documentation for the purchase of) the shares in the Octopus Group before 25 February 2022 (the Octopus Acquisition). In the period before the completion of the Octopus Acquisition, the Company (a) was required to transfer all its shares in AEI (the AEI Shares) into escrow; (b) agreed to sell to Lecca for US$5 million 5,617,978 of those AEI Shares, and pay that sum to the Petitioner and (c) agreed, if the acquisition by AEI of 100% of the share capital of MTBL Global Pte Ltd (the MTBL Acquisition) closed on or before 31 March 2022, to pay US$10 million to the Petitioner. If however the MTBL Acquisition did not close on or before that date, Lecca agreed to pay US$10 million to the Petitioner (and in consideration the Company would sell to Lecca an equivalent number of its shares in AEI). If the Octopus Acquisition went ahead and completed, then Lecca was required to pay a further US$5 million to the Petitioner (once again in consideration of the Company selling to Lecca an equivalent number of its shares in AEI) and the Petitioner would become entitled to AEI Shares to a value that would mean that it had had been paid a total of US$24 million after taking into the other sums paid to it pursuant to the Framework Agreement. The parties agreed to use their best endeavours to obtain the approval of third parties and that none of them would be liable for any delay in completion of the transactions by such third parties.
The Framework Agreement stated that completion of all these steps and transactions would represent a full and final settlement of all sums owed by the Company to the Petitioner and that the Petitioner agreed to refrain and forbear from pursuing all legal proceedings against the Company and Mr Sun arising under of in connection with the various previous agreements. Clause 9 stipulated that save as expressly provided in the Framework Agreement, nothing contained in it affected or prejudiced the Petitioner's rights under the subscription agreement or any other ancillary agreements. However, notwithstanding these terms, the Company had the right exercisable up to 30 June 2022 to redeem all of the Petitioner's Class D Shares for US$25 million.
It appears that the Petitioner was paid Singapore $10 million by the Company on 22 or 23 March 2022 (being approximately US$7,366,483.32). The basis of this payment and the liabilities to...
To continue reading
Request your trial