Atom Holdings v AAX Limited (MC 36 of 2023) [2024] SCSC 149 (16 July 2024)

BURHAN J

1. The Petitioner Atom Holdings, a company incorporated on 28 August 2018 under the laws of the Cayman Islands, filed a petition for winding up of the Respondent AAX Limited, a subsidiary company of the Petitioner incorporated on 6 May 2019 under the International Business Companies Act 2016 (“IBC Act”). Trident Trust Company (Seychelles) Limited acted as the Respondent’s agent in Seychelles until July 2023.
2. On 3 March 2023, two users of AAX Platform, filed a petition in the Cayman Island Courts seeking an order for winding up of the Petitioner Company and the appointment of provisional liquidators to take control of the company.  The Grand Court of the Cayman Islands on 8 March 2023, granted the prayer through a provisional liquidation order (PL Order), and further appointed two joint provisional liquidators, Mr. George Kimberley Leck and Ms. Angela Barkhouse who were empowered by the PL Order to commence winding up proceedings of the Respondent before this Court.
3. The petition contains the affidavit of Mr. Leck dated 7 June 2023, who contended that Atom Holdings is a creditor or contingent creditor of the Respondent, and that, by virtue of section 309 of the IBC Act has locus standi to seek the winding up of the Respondent. Mr Leck stated that the Court is empowered by section 310 of the IBC Act, to wind up the Respondent on the premise that the company is insolvent in so far as, it is unable to pay its debts as they fall due and that its liabilities exceeds its assets; and that it is just and equitable that the company be wound up for the lack of visibility over the true financial position of the Atom Group.
4. On the 17^th April 2024, this Court issued its first order on the petition, and accordingly granted permission for the Petitioner to proceed with the application to wind up the Respondent Company, fixing the date for hearing, with the caveat that all relevant steps be taken up by the Petitioner prior to the said date.
5. Thereafter the Petitioner has since filed two applications, (MA 116 of 2024) dated 16 May 2024 and MA 170 of 2024 dated 3 July 2024. In application MA 116 of 2024 as the enclosed Power of Attorney in the said application was not Apostilled the application was withdrawn.
6. Thereafter, the Petitioner filed an application on 3 July 2024 (MA 170 of 2024) informing Court of the change of liquidators and moving the court for the winding up application to proceed noting the new prayers and change in liquidators. The application was granted.

7. This Court will now proceed to consider the facts in the main application for winding up, MC 36/2023 and also take into consideration the facts set out in the affidavits of Mr Lek dated 7 June 2023 and Ms. Barkhouse dated 25 June 2024 and the amended prayer set out in Ms Barkhouse’s affidavit in MA 170 fo2024.
8. Giving due consideration to the affidavit of Ms Barkhouse, she states that an order was issued by the Grand Court of the Cayman Islands on 19 April 2024, wherein Mr. George Leck was relieved and discharged of his duties as the joint official liquidator of the Petitioner. In Mr. Leck’s stead she states that the Grand Court of the Cayman Islands on 10 June 2024 issued an order appointing Mr. Robert Shifman of Kroll (Cayman) Ltd., 3^rd Floor, 90 North Church Street, George Town, Grand Cayman KYI-1204, Cayman Islands “as Joint Official Liquidator, with the power to act jointly and severally with Angela Barkhouse, the continuing Joint Official Liquidator of the Company.” Ms  Barkhouse in her affidavit affirmed and adopted the contents of Mr. Leck’s affidavit, including the prayers contained therein.
9. Ms. Barkhouse’s affidavit further highlights a phrase in paragraph [2] of the 17 April 2024 Order of this Court which reads “Pursuant to a filing for bankruptcy on the 11^th November 2022, the Grand Court of the Cayman Islands on 08 March 2023 has granted a provisional liquidation.” Ms. Barkhouse states that this was an oversight on the part of this Court and prays that the Court substitute the above quoted words to rightly portray the true situation, and to read: “Pursuant to a petition dated 03 March 2023 to wind up the Petitioner, the Grand Court of the Cayman Islands on 08 March 2023 has granted a provisional liquidation.”
10. Ms. Barkhouse therefore prays for the following:

i. That the Respondent be wound up in accordance with sections 310(e) and 310(g) of the IBC Act.

ii. That the powers provided under section 321 of the IBC Act be exercised by herself (Ms. Angela Barkhouse), and Mr. Robert Shifman as joint liquidators.

iii. That the order delivered by the Supreme Court of Seychelles on 17 April 2024 be amended such that at its paragraph 2 contains the right wording as provided for in paragraph [7] above.

iv. That in accordance with the order dated 19 April 2024 by the Grand Court of the Cayman Islands, prayer (ii) of the winding up petition dated 07 June 2023 in the abovementioned Main Case be amended such that Ms. Angela Barkhouse and Mr. Robert Shifman of Kroll (Cayman) Ltd., 3^rd Floor, 90 North Church Street, George Town, Grand Cayman KYI-1204, Cayman Islands be appointed as Joint Official Liquidators of the Respondent; and;

v. Such other order as this Court may deem just.

The Issues

11. In terms of section 310 of the IBC Act in order to secure a winding up order against the Respondent, the Petitioner must establish the following:

1. that it is a “creditor” of the Respondent within the meaning of section 309 of the IBC Act;
2. the Respondent is insolvent within the meaning given in section 299 of the IBC.
3. that it is just and equitable to wind up the Respondent (per section 310(g) of the IBC Act).

12. In his affidavit, Mr. Leck justified the Petitioner moving against the Respondent on the basis that the Petitioner is a creditor of the Respondent. Further justification may be gathered from section 309 by virtue of the Petitioner’s “interest” in the matter in so far as that section declares:

“309.(1) If any of the circumstances specified in section 310 apply to a company, an application may be made to the Court, by the company, by any director, member, creditor or liquidator thereof or by any other interested party, for the compulsory winding up of the company.” [Emphasis added]

13. The Indian Supreme Court case of S. K. Gupta & Anr. v K. P. Jain & Anr 1979 SCC (3) 54 interpreted the requirement that the applicant should have an “interest” in the affairs of the company “has wider denotation than a member or creditor or liquidator of a company.” The fact of the Respondent having being named as a creditor of the Petitioner, the suspension of operations of the Respondent following the winding up petition infers such interest of the Petitioner on the Respondent. The Petitioner therefore has requisite interest both in the subsidiary company and the scheme in respect of it, so as to enable it to maintain an application under section 309(1). More so, as holding company, the Petitioner has shareholding in the Respondent Company, effectively being endowed with power to move the application as member/shareholder as well. These confer the Petitioner with locus standi to institute the petition.
14. The Petitioner has specifically stated that the Respondent is “insolvent” or is likely to become insolvent on the basis that it is unable to pay its debts as they fall due and its liabilities exceed its assets. In support of the application, the Petitioner attached the First Joint Liquidators’ Report dated 05 April 2023 (as contained in Annexure F, page 12) which reflected, among others, information on the Respondent’s cessation of operations, the ousting of its director Mr Sim Jeremy; The facts prove to the Court’s satisfaction that the Respondent is unable to pay its debts within the meaning of section 299 of the IBC Act and therefore insolvent.
15. As a holding company and thus a shareholder in the Respondent company, the Petitioner is a party to the company’s constitution, that is, the statutory contract between the shareholders inter se and the company, and therefore has an interest recognised and protected by law in remedying any injustice or inequity in the way in which the parties to that contract perform their obligations under it [Founder Group (Hong Kong) Limited (in liquidation) v Singapore JHC Co Pte Ltd [2023] SGHC 159]. A winding up order addresses injustice and inequity because it has two important effects. First, it puts a disinterested external administrator, appointed by and answerable to the court, in control of the company. Second, the winding up order brings an end to the company as a commercial enterprise. It thereby allows all shareholders, including the minority shareholder to recover their capital, which would otherwise be locked in the company subject to the will of the majority, and deploy it in other investments [Ma Wai Fong Kathryn v Trillion Investment Pte Ltd and others and another appeal [2019] 1 SLR 1046 at [38])]. The above justifies the Petitioner’s averments that it is just and equitable that the petition be granted.

           CONCLUSION

16. Having considered all the aforementioned facts of this case and the provisions of the law as set out above, I am satisfied that the Petitioner has established all the requirements set out in [11] above to secure a winding up of the Respondent. Section 314 of the IBC Act states that after hearing the application, the Court will be empowered to “grant the application on such terms and conditions as it thinks fit, dismiss the application, or make such other order as it thinks fit” and further appoint such liquidator/s as it deems appropriate. 
17. Wherefore, this Court grants the following order:

1. This Court makes order that the Respondent AXX Limited be wound up by reason of it being insolvent and that it is just and equitable that it be wound up as per sections 310(e) and 310(g) of the IBC Act.

2. Ms. Angela Barkhouse and Mr. Robert Shifman of Kroll (Cayman) Ltd., 3^rd Floor, 90 North Church Street, George Town, Grand Cayman KYI-1204, Cayman Islands are confirmed as Joint Official Liquidators of the Respondent company.
3. That the powers provided under section 321 of the IBC Act be exercised by Ms. Angela Barkhouse and Mr. Robert Shifman of Kroll as joint official liquidators.
4. This Court makes further order that paragraph [2] of the order dated 17 April 2024 be hereby amended in that the words: “Pursuant to a filing for bankruptcy on the 11^th November 2022” be substituted by the following:

“Pursuant to a petition dated 03 March 2023 to wind up the Petitioner.”

18. The joint liquidators are hereby ordered to take the necessary steps under section 321 of the IBC Act.

Signed, dated and delivered at Ile du Port on 16^th July 2024.

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M Burhan J