Can An Ultimate Beneficial Holder Of Notes Present A Winding-Up Petition Against The Issuer?

• Published date: 05 May 2023
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Contracts and Commercial Law
• Law Firm: Appleby
• Author: Mr David Bulley, Andrew Jackson, Ulrich Payne and Ida Nylund
• topic: Bankruptcy and Insolvency,Contracts,Trust Law,Corporate / Commercial,Civil Procedure,Securities Law

In the recent decision in Re Shinsun Holdings (Group) Co., Ltd. FSD 192 of 2022 (DDJ) (21 April 2023) (unreported), the Grand Court of the Cayman Islands ruled, for the first time, that an ultimate beneficial holder of notes could not bring winding-up proceedings against the issuer where it had failed to obtain the necessary authorisations as required in the indenture. The Honourable Doyle J dismissed the winding-up petition on the basis that the petitioner, Shenwan Hongyuan Strategic Investment (H.K.) Ltd (Shenwan), neither had standing as a contingent creditor nor authorisation from the registered holder of the notes to progress the winding-up proceedings.

BACKGROUND AND KEY ISSUES

Shinsun Holdings (Group) Co., Ltd. (the Company), a Cayman incorporated exempted company, had issued certain senior notes due 2023 (the Notes) pursuant to a New York law governed indenture (the Indenture). The Indenture was entered into with China Construction Bank (Asia) Corporation Limited, as trustee (the Trustee) who also served as the common depositary of the Notes (the Depositary). The Notes were registered in the name of CCB Nominees Limited (CCB Nominees), the nominee of the...