Legal Update: Recognition Order Granted notwithstanding SFC’s Restrictive Notice and Police’s Letter of No Consent

Tanner De Witt acted for Chan Ho Yin (also known as Michael Chan) of Kroll (HK) Ltd and Elaine Hanrahan, the Joint Liquidators of Bull’s-Eye Limited (in Liquidation) (“BEL”) which was wound up in the BVI on 15 January 2024. BEL is a company connected to Hua Han Health Industry Holdings Limited (formerly listed on Main Board of the HKEx, stock code 587) (“Hua Han”). Michael Chan is also a one of the joint and several liquidators of Hua Han. BEL held roughly 30% shares in Hua Han and its sole shareholders and directors were the founders of Hua Han. BEL held substantial assets in Hong Kong and required assistance from the Hong Kong court to take control of those assets.

On 23 October 2024, Tanner De Witt successfully obtained a judgment for recognition and assistance allowing the liquidators to take control of BEL’s substantial assets held in various securities firms. In granting the order DHCJ Le Pichon applied the now well-established legal principles summarised in our earlier article on Re Bridge Global. As a brief recap, in the 2022 decision of Re Global Brands, the Court shifted from the traditional approach and held that it would only ordinarily assist foreign officeholders if the relevant insolvency proceedings were commenced in the company’s COMI.  Otherwise, application for recognition and assistance should be declined unless: (1) it is limited to recognition of the liquidator’s authority, if appointed in the place of incorporation, to represent the company in furtherance of that authority (namely the “managerial assistance” ground); and (2) other limited and carefully prescribed assistance which does not fall within the first category as a matter of practicality.

The present case concerned the recognition and assistance granted in favour of foreign officeholders appointed pursuant to foreign insolvency proceedings commenced in BEL’s place of incorporation (i.e., the BVI) instead of the jurisdiction which is most likely to be its COMI (i.e., Hong Kong). It falls within the exception (1) stated above. The Court’s willingness to offer recognition and assistance on the basis of “managerial assistance” and as a matter of practicality in the post-Global Brands era highlights (once again) the Hong Kong Court’s fundamental willingness to assist foreign officeholders.

A novel aspect of this application was that the order was granted notwithstanding that certain securities accounts were subject to either a Letter of No Consent issued by the Hong Kong Police or a Restrictive Notice issued by the SFC prohibiting inter alia the disposal of BEL’s assets. The fact that the Court granted the order despite the restrictions further attests to the comment above regarding the Court’s willingness to assist foreign officeholders.

Tim Au (Partner), Samantha Chan (Associate) and Tiffany Chan (Trainee) of Tanner De Witt acted for the Joint Liquidators. We were assisted by Justin Ho of Temple Chambers in this matter.

If you would like to discuss any of the matters raised in this article, please contact:

Tim Au
Partner | E-mail

The above is not intended to be relied on as legal advice and specific legal advice should be sought at all times in relation to the above.