The Companies Act (2023 Revision) and Atom Holdings

• Jurisdiction: Cayman Islands
• Judge: Justice Kawaley
• Judgment Date: 15 June 2023
• Docket Number: CAUSE NO: FSD 54 OF 2023 (IKJ)
• Court: Grand Court (Cayman Islands)

In the Matter of the Companies Act (2023 Revision)

And in the Matter of Atom Holdings

Before:

The Hon. Justice Kawaley

CAUSE NO: FSD 54 OF 2023 (IKJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Creditors' winding-up petition based on inability to pay debts-ex parte without notice application to appoint joint provisional liquidators-cryptocurrency exchange-need for independent investigation into affairs of company-standing of petitioners as contingent creditors-need to preserve assets and records-mandatory or directory nature of requirement for cross-undertaking as to damages-right of access to the Court-Cayman Islands Constitution Order 2009 section 7-Companies Act (2023 Revision) sections 92 (d), 139-Companies Winding Up Rules (2023 Revision) Order 1 rule 4 (1A), Order 4 rule 3-Grand Court Rules Order 2

Appearances:

Mr Adam Crane and Ms Nicosia Lawson, Baker and Partners (Cayman) Limited, for the Petitioners

IN CHAMBERS

Introductory

1 The Petition dated 3 March 2023 was presented by Ms Kalaivani Kandasan and Mr Ulf Parpart-Hergesell seeking to wind-up the Company pursuant to section 92(d) of the Companies Act (2023 Revision) (the “Act”) on the grounds that the Company is unable to pay its debts. By an Ex Parte Summons dated 3 March 2023, supported by the First Affidavit of Kalaivani Kandasan and the First Affidavit of Ulf Parpart-Hergesell, the Petitioners sought the appointment of joint provisional liquidators (“JPLs”) (alternately joint receivers) and suspension of the need to advertise and serve the Petition. A separate Confidentiality Order was sought based on the need to enable immediate asset and record conservation steps to be taken in relation to the Company's management, the management of which was said to have, effectively, left the corporate ship adrift.

2 Following an ex parte hearing on 8 March 2023, in addition to making a Confidentiality /Sealing and Gagging Order (which resulted in the present Judgment being temporarily embargoed from publication), I granted an Order that:

“ 1. Angela Barkhouse and George Kimberley Leck of Quantuma (Cayman) Ltd., Suite N404, Flagship Building, 142 Seafarers Way, George Town, Grand Cayman, Cayman Islands, be appointed as joint provisional liquidators of the Company (the JPLs).

2. The JPLs shall not be required to give security for their appointment.

3. The JPLs have the power to change the registered office of the Company at their discretion.

4. The JPLs have the power to act jointly and severally in their capacity as liquidators of the Company and have the power to conduct the ordinary, day-to-day business operations of the Company.

5. The JPLs are hereby directed jointly and severally to take such steps as, in their discretion, may be necessary or expedient:

i. for the protection and preservation of the value of the Company's assets, rights and/or property of every description, including property held on trust, whether held by the Company, its subsidiaries, or any other person; and

ii. for preventing the dissipation or misuse of the Company's assets and those of its subsidiaries.

6. For the purposes set out at paragraph 5 above, the JPLs be directed to investigate and report on the affairs of the Company and its subsidiaries within and outside of the Cayman Islands, including in Seychelles, Singapore, Hong Kong, and Malta.

7. The JPLs be authorised to exercise without further sanction or order of the Court within and outside of the Cayman Islands the powers specified in Part II of the Third Schedule to the Companies Act, namely;

i. To identify, take possession of, collect and get in the property of the Company, including without limitation all bank accounts, computer servers or other related equipment, digital assets, including any property held on trust by the Company, and for that purpose to take all such proceedings as they consider necessary;

ii. To do all acts and execute, in the name and on behalf of the Company, all deeds, receipts and other documents and for that purpose to use, when necessary, the Company seal; and

iii. To do all other things incidental to the exercise of their powers.

8. Further, the JPLs be authorised to exercise without further sanction or order of the Court within and outside the Cayman Islands the following powers as specified in Part I of the Third Schedule to the Companies Act:

i. To bring or defend any action or other legal proceedings in the name and on behalf of the Company other than the Petition;

ii. To engage staff (whether or not as employees of the Company) to assist in the performance of their functions as JPLs; and

iii. To engage attorneys and other professionally qualified persons to assist them in the performance of their functions.

9. Further and in any event, the JPLs be authorised to exercise without further sanction or order of the Court within and outside the Cayman Islands the following powers:

i. To commence winding up proceedings and/or any insolvency process in the Cayman Islands or any other country in respect of any subsidiaries of the Company;

ii. To ascertain, demand, receive and give valid receipts for and protect the moneys, properties, securities, debts and things in action and all other assets of the Company, whether within or outside the jurisdiction of this Court and for that purpose to take all such proceedings as they consider necessary;

iii. To collect, get in, inspect, review, secure, take possession of and copy the books, records, and documents of the Company and its subsidiaries (whether in hard copy, electronic form or otherwise), with or without the assistance of the Court or a court of competent jurisdiction, in order to: (i) ascertain, and conduct investigations of the affairs of the Company and its subsidiaries; (ii) prevent destruction and/or alteration of those documents and for those purposes to take all such proceedings as the JPLs consider necessary. For the avoidance of doubt, such powers shall include but are not limited to:

a) requiring any of the directors and/or former directors of the Company and its subsidiaries to provide to the JPLs any documents and/or information of the Company and its subsidiaries in their possession or control; and

b) requiring any service providers of the Company and its subsidiaries to provide to the JPLs any documents and/or information in their possession or control which the Company and/or any of its subsidiaries has a right to receive;

iv. To do all such things as may be necessary or expedient for the protection or recovery of the Company's property at law or in equity, including such property held on trust by the Company or its subsidiaries, in such jurisdictions as may be appropriate including, without limitation, in the Cayman Islands, Seychelles, Singapore, Hong Kong, and Malta;

v. To examine individuals on oath or otherwise, both with or without the assistance of the Court or any court of competent jurisdiction, if the JPLs consider it expedient for the purpose of protecting the assets of the Company including as part of the investigation referred to at paragraph 6 above;

vi. To take control of the subsidiaries of, and other companies controlled by, the Company (or such shares of subsidiaries or companies controlled by the Company), to manage the affairs or carry on or close or cease to operate all or any part of the business of such subsidiaries or companies (in accordance with the constitutional documents of such companies) if the JPLs consider it expedient for the purpose of protecting the assets of the Company, including such property held on trust by the Company and its subsidiaries, including as part of the investigation referred to at paragraph 6 above;

vii. To call or cause to be called such meetings of shareholders of the Company or its subsidiaries or companies otherwise controlled by the Company, or take such further and other action, as permitted in accordance with the constitutional documents of such subsidiaries or companies as the JPLs consider it necessary to remove directors or appoint additional directors to the Board of Directors of such subsidiaries or companies as the JPLs consider expedient for the purpose of protecting the property of the Company or property held on trust by the Company or its subsidiaries, or companies otherwise controlled by the Company, including by assisting with the investigation referred to at paragraph 6 above;

viii. To do all such things as may be necessary or expedient to freeze or preserve property held by any person or entity, whether a related party or otherwise, against which the Company has a claim and where there is a risk of dissipation in such jurisdictions as may be appropriate including, without limitation, in the Cayman Islands, Seychelles, Singapore, Hong Kong, and Malta;

ix. To carry on the business of the Company, to the extent necessary, save that the JPLs shall not make payment on any indemnity save with further order of the Court;

x. To communicate with and carry out any necessary filings with regulatory bodies as appropriate, including, without limitation, the Cayman Islands

Registrar of Companies and the Cayman Islands Monetary Authority, in the name and on behalf of the Company;

xi. To appoint agents in the Cayman Islands, Seychelles, Singapore, Hong Kong, Malta, and elsewhere to do any business contemplated by this Order which they are unable to do themselves or which can more conveniently be done by an agent;

xii. To open or to close any bank accounts in the name and on behalf of the Company and to open any bank accounts on behalf of the Company (in provisional liquidation) for the purpose of paying the costs and expenses of the provisional liquidation;

xiii. To render and pay invoices out of the assets of the Company for their own remuneration at the rates prescribed by the Insolvency Practitioners' Regulations (2023...