Glas SAS (London Branch) v European Topsoho SARL
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bright |
| Judgment Date | 26 January 2024 |
| Neutral Citation | [2024] EWHC 83 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2021-000666 |
[2024] EWHC 83 (Comm)
Mr Justice Bright
Case No: CL-2021-000666
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, WC4A 1NL
Sue Prevezer KC and Alex Barden (instructed by Jenner & Block (London) LLP) for the Claimant
Leonora Sagan (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the 1 st Defendant
Niall McCulloch and Christopher Pask (instructed by Archer, Evrard & Sigurdsson LLP) for the 2 nd Defendant
Hugo Page KC and James A Davies (instructed by Mackrell) for the 3 rd Defendant
Hearing dates: 18 January 2024
Approved Judgment
This judgment was handed down remotely at 10:00am on 26/01/2024 by circulation to the parties' representatives by e-mail and by release to the National Archives.
On 17 November 2023, there was a hearing in this matter to deal with the application of the Claimant (“GLAS”) for summary judgment against the Defendants. GLAS's application notice had been issued on 29 August 2023, and the hearing date had been fixed on 6 September 2023, with an estimate of 2.5 hours.
It was not possible to deal with the Claimant's application, because:
(1) On 13 November 2023, the Third Defendant (“Ms Qiu”) issued an application seeking an extension of time to file and serve a Defence. Ms Qiu had not previously taken any part in the action, save that she had filed an acknowledgment of service on 3 January 2022.
(2) On 16 November 2023, the Second Defendant (“Dynamic”) issued an application seeking an extension of time to file and serve an acknowledgment of service indicating that it intended to challenge the jurisdiction of the Court. Dynamic had not previously taken any part in the action whatsoever.
I made directions intended to enable all the outstanding applications to be dealt with on an expedited basis, on 18 January 2024, with an estimate of 1 day. This judgment follows the hearing which duly took place on 18 January 2024, when I heard oral submissions on the various applications from Ms Sue Prevezer KC and Mr Alex Barden on behalf of the Claimant, from Ms Leonora Sagan on behalf of the First Defendant (“ETS”), from Mr Niall McCulloch on behalf of Dynamic and from Mr Hugo Page KC on behalf of Ms Qiu. I am very grateful to all of them for their assistance.
The parties, and other relevant entities/individuals
GLAS is a corporate trustee, providing trustee and loan administration services. It is incorporated in France, but also has an office in London, which is the emanation involved in this case and in the underlying business.
ETS is a company incorporated in Luxembourg. It is indirectly owned by Shandong Ruyi Technology Group Co. Ltd. (“Shandong Ruyi”), which is incorporated in the PRC and owns interests in a number of group companies, mainly in the textile/clothing industry. ETS was incorporated for the purpose of holding a majority stake in SMCP S.A. (“SMCP”), a company incorporated in France that carries on business in the fashion industry. By 2018, it held a 53% stake in SMCP.
On 28 February 2023, ETS was declared bankrupt in insolvency proceedings in Luxembourg, and a Curator was appointed, Ms Valérie Kopéra.
Prior to February 2023, the person running ETS (in effect its CEO) appears to have been Ms Qiu. She signed the statements of truth that supported ETS's statements of case, as “Manager”. In more formal terms and under ETS's constitution, its “A” managers included Mr Kelvin Ho (until 9 September 2021) and, until the appointment of the Curator, Ms Qiu and Mr Tan Huang. Its “B” managers included Mr Hans de Zwart and Mr Joost Mees (from incorporation until September/October 2021) and Mr Giovanni Incardona (until October 2021).
Ms Qiu is the daughter of Mr Yafu Qiu, who has at all material times been the Chair of Shandong Ruyi. She is resident in Jining, in Shandong Province in the PRC. This is where Shandong Ruyi has its headquarters. I do not know what, if any, role she has in other companies with the Shandong Ruyi group, in addition to ETS.
Wuhu Ruyi Xinbo Investment Partnership (Limited Partnership) (“Xinbo”) is a PRC limited partnership in which the principal interests are of Shandong Ruyi and China Cinda Asset Management Co., Ltd (“Cinda”), a Chinese financial institution. Cinda is a major creditor of Shandong Ruyi and/or of companies within the group. Xinbo appears to have its headquarters in Wuhu, in the PRC.
Dynamic is a company incorporated in the BVI.
(1) It was founded by Ms Qiu in April 2017. Until 30 July 2021, it was owned by Ms Qiu, who was also its sole director.
(2) On that date, its ownership was transferred to a Precious Pearl Candy Holding Ltd (“Precious Pearl”), another BVI company which was itself owned by Ms Qiu and which owned Dynamic subject to a trust for Ms Qiu's children, administered by Intertrust (Singapore) Ltd (“Intertrust”). On the same date, Ms Qiu was replaced as director by Grandall International Holding Ltd (“Grandall”), a BVI company which acted via two professional service providers in Singapore who appear to be associated with Intertrust, Ms Kanchana Boopalan and Mr Yongtao Song.
(3) In about March 2022, the trust arrangement ended. On 16 March 2022, a further BVI company owned by Ms Qiu, Dynamic Day Enterprises Ltd (“Dynamic Day”) was appointed as director of Precious Pearl. On 12 April 2022, Dynamic Day was appointed as sole director of Dynamic, replacing Grandall.
(4) On 5 May 2023, Precious Pearl transferred its shareholding in Dynamic to a subsidiary of Xinbo. Xinbo appears to have had ultimate control over Dynamic since that date, with the result that Dynamic's evidence in support of its application was provided by Ms Zhang Yu, the Deputy General Manager of Xinbo. The sole director remains Ms Qiu's company, Dynamic Day.
Ms Zhang's evidence suggests that, until 5 May 2023, Dynamic was, in practice, effectively managed by Ms Qiu. Ms Qiu does not accept this, but it is not clear who the person in charge of Dynamic was, prior to 5 May 2023, if not Ms Qiu. It seems unlikely that Grandall (i.e., Ms Boopalan and Mr Song) had significant practical involvement in any decisions.
The Trust Deed and the Bonds
On 21 September 2018 and pursuant to documentation including a Trust Deed of that date, ETS issued €250,000,000 of Secured Exchange Bonds (“the Bonds”) bearing a coupon of 4% per annum, due September 2021. They were secured by the pledge of some of the ETS's shares in SMCP.
The original Trustee under the Trust Deed was BNP Paribas Trust Corporation UK Limited (“BNP Trust”).
GLAS took over the relevant trust duties on 24 December 2020. A dispute arose between GLAS and ETS in 2021, which was compromised on 17 June 2021. In the context of the settlement of that dispute, Ms Qiu (as “A” manager of ETS) and Mr Joost Mees (as “B” manager of ETS) certified that, other than GLAS's pledge over the Pledged Shares, there was no security over any shares held by ETS in SMCP (“the Managers' Certificate”).
ETS failed to pay any sum to GLAS when the Bonds matured on 21 September 2021. On 22 September 2021 GLAS issued a Notification of Breach. On 4 October 2021 it issued a Default Notice, which ETS failed to pay. On 5 October 2021, GLAS sent a demand for payment of a Deferred Fee, payable by ETS.
The Pledged Shares in SMCP
Security under the Trust Deed was provided by a requirement for ETS to pledge some of its shares in SMCP, to be held in an identified security account with BNP Paribas Securities Services (London Branch) (“BNPPSS London”). On 21 September 2021, 28,028,163 shares were pledged (“the Pledged Shares”). The Pledged Shares are still held by or for GLAS.
The Unpledged Shares
The value of the Pledged Shares was below the total sum due under the Bonds. ETS's only substantial asset was its shareholding in SMCP. This hearing has mainly concentrated not on the Pledged Shares, but on the balance of 12,106,939 shares (“the Unpledged Shares”). Until October 2021, they were held by ETS in an account with BNP Paribas Securities Services Paris (“BNPPSS Paris”), in France.
The Disposal of the Unpledged Shares
The following transactions are referred to in the statements of case and evidence as “the Disposal”:
(1) On 27 October 2021, ETS transferred the Unpledged Shares from its own account with BNPPSS Paris to that of Dynamic. Dynamic's account with BNPPSS Paris had been opened on 18 October 2021 and the account number was communicated to Dynamic on 21 October 2021. Ms Qiu's evidence is that Dynamic's account was opened specifically for it to receive the Unpledged Shares, as transferee from ETS.
(2) On 3 November 2021, Dynamic instructed BNPPSS Paris to transfer the Unpledged Shares into bearer form (from pure registered form) and to transfer the bearer shares to an account held by Dynamic with JP Morgan Chase Bank N.A. Singapore (“JPM Singapore”), where they are still held.
On 4 November 2021, SMCP issued a press release announcing that ETS had disposed of the Unpledged Shares but gave no details.
On 5 November 2021, GLAS obtained an order from the Paris Commercial Court against BNPPSS Paris, requiring it to provide information in relation to the transfer of the Unpledged Shares. On 12 November 2021, BNPPSS Paris disclosed to GLAS that the Unpledged Shares were now held by JPM Singapore.
Pursuant to the order of the Paris Commercial Court dated 16 November 2021, BNPPSS Paris disclosed a copy of what appears to be a Share Sale Agreement dated 22 October 2021, by which ETS appears to have agreed to sell the Unpledged Shares to Dynamic for €1 (the “SSA”). BNPPSS Paris's understanding from ETS was this was the instrument by...
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