Luc A. Despins (as Foreign Representative of HO Wan Kwok) v HO Wan Kwok
| Jurisdiction | England & Wales |
| Judge | Parfitt |
| Judgment Date | 20 January 2023 |
| Neutral Citation | [2023] EWHC 74 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BR-2022-000408 |
and
[2023] EWHC 74 (Ch)
DEPUTY INSOLVENCY AND COMPANIES COURT JUDGE Parfitt
Case No: BR-2022-000408
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF HO WAN KWOK
AND IN THE MATTER OF THE CROSS-BORDER INSOLVENCY REGULATIONS 2006
Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
Paul Wright (instructed by Paul Hastings (Europe) LLP) for the Applicant
Daniel Lewis (instructed by Wedlake Bell LLP) for 3 rd Interested Party
The Respondent and the 2 nd Interested Party did not appear and were not represented
Harcus Parker Limited appeared but were not represented
Hearing dates: 20 December 2022
This is an application by Luc A. Despins (the “Applicant”), who is the foreign representative of the Respondent, Ho Wan Kwok (the “Respondent”). The application seeks recognition under the Cross-Border Insolvency Regulations 2006 (the “CBIR”), as foreign main proceedings, of the Chapter 11 bankruptcy case concerning the Respondent in the US Bankruptcy Court, District of Connecticut, Bridgepoint Division (the “US Bankruptcy Court”).
The application also seeks an order that various documents are provided to the Applicant by Harcus Parker Limited (“Harcus Parker”). Harcus Parker are the solicitors acting in litigation before the High Court in England (the “English Proceedings”) in which the claimants are the Respondent and two BVI companies, Ace Decade Holdings Limited and Dawn State Limited (respectively, “Ace Decade” and “Dawn State”). The defendant in the English Proceedings is UBS AG (and its London branch). Harcus Parker, Ace Decade and Dawn State have been joined as interested parties to this application, and I have heard counsel for Ace Decade. The solicitor with conduct of the English proceedings at Harcus Parker was present in court and briefly addressed me on certain practical questions about the English Proceedings and the impact on those proceedings of any order I might make.
The quantum of the English Proceedings is around $500m. It is at a relatively early stage. UBS brought a preliminary jurisdiction challenge which was dismissed by Mrs Justice Cockerill on 9 February 2022. UBS appealed that order on 18 March 2022. The hearing of the appeal was originally listed for October 2022, but was adjourned. The appeal is presently listed in the Court of Appeal on 8 or 9 February 2023.
The Applicant presently has no information concerning the English Proceedings, despite it not being in dispute that the Respondent's interest in those proceedings has vested in the Applicant. The Applicant wants to be provided with documents in order to consider the merits of the claim before determining whether he wants to intervene, and to be able to instruct any legal representatives in advance of the appeal hearing. The English Proceedings may be a very valuable asset which can be realised for the benefit of the Respondent's creditors, although conversely the estate may be exposed to an adverse costs order if the Applicant intervenes. The Applicant has no primary knowledge of the underlying facts. The relevant documents are in the hands of Harcus Parker and the Respondent has not provided the Applicant with the documents at this stage. There is a certain degree of urgency in relation to the present application so that the Applicant will have sufficient time to consider any documents before the hearing of the appeal in February 2023.
The application also originally sought an order providing the Applicant with various powers, but this was not pursued before me. The Applicant merely seeks liberty to apply so that a further application can be made in the future if thought necessary.
The background
On 15 February 2022 the Respondent petitioned for his own bankruptcy pursuant to chapter 11 of the US Bankruptcy Code.
On 19 March 2022 the US Trustee applied to the US Bankruptcy Court for an order appointing a trustee. That application was granted on 15 June 2022 and the US Trustee was directed to appoint a trustee in the Chapter 11 proceedings.
On 7 July 2022 the US Trustee applied for an order appointing the Applicant as the Respondent's Chapter 11 trustee.
In connection with that application, the Applicant made a declaration of disinterestedness. The Applicant is a partner of Paul Hastings LLP (“Paul Hastings”), an international law firm with offices across the United States, Asia and Europe.
Among the statements made in the declaration of disinterestedness was that Paul Hastings had represented UBS AG (London Branch) in an unrelated matter which ended in November 2021, and continues to represent various UBS entities on other unrelated matters, largely involving advice related to capital markets and leveraged finance transactions. The Applicant states that he has never represented any UBS entity, that he is able to be adverse to UBS AG and to be the named plaintiff, as Chapter 11 Trustee, in any lawsuit against UBS AG.
On 8 July 2022 the Applicant was appointed as trustee by the US Bankruptcy court.
On 15 July 2022 the Respondent filed a motion objecting to the appointment. The reasons include that Paul Hastings had previously represented “multiple parties related to the debtor's largest creditor and zealous adversary, Pacific Alliance Asia Opportunity Fund” and that Paul Hastings had a ‘significant relationship’ with the Chinese government owing to it having offices there and doing significant business there. On 1 August 2022 the motion was dismissed, apparently on technical rather than substantive grounds. The court's order nevertheless confirmed that no substantive grounds existed.
That part of the order was appealed by the Respondent on 9 August 2022, an appeal which remains outstanding. There is no stay pending the resolution of the appeal.
On 12 July 2022 the Applicant applied to the US Bankruptcy Court for an order authorising the instruction of Paul Hastings.
On 27 July 2022 the Respondent filed a notice of objection. He put forward the same grounds as those on which he had objected to appointment of the Applicant, adding that Paul Hastings had acted for UBS entities on various matters.
On 4 August 2022 the US Bankruptcy Court considered the application and dismissed it. No appeal has been brought. During the course of those proceedings, the Applicant gave an assurance in answer to a question raised by the court that Paul Hastings would not “handle” the English Proceedings. This was described before me as a “carve out” and the Applicant accepts that he is bound by it. It appears from the transcript of the proceedings before the US Bankruptcy Court that this carve out may have rested on a misunderstanding of the role of barristers in English litigation, with the carve out being offered because barristers would be handling the English Proceedings as opposed to a firm such as Paul Hastings. Even so, the Applicant did not seek to resile from the carve out on the present application. If the Applicant wishes to participate in the English Proceedings, he will need to instruct a firm of solicitors other than Paul Hastings.
On 27 July 2022 the Applicant made another application to the US Bankruptcy Court seeking various forms of declaratory relief. The Respondent filed evidence in opposition.
Meanwhile, the Applicant wrote to Harcus Parker, which as described above is the firm instructed by the three claimants in the English Proceedings, seeking documents to discover more about the nature and merits of those proceedings. Harcus Parker refused without the Respondent's consent in writing.
The Applicant then amended the 27 July 2022 application to seek relief requiring such a letter to be sent. The Respondent objected, on a number of grounds. Two were most important for the present application before this court – that there had been no recognition of the Applicant in the UK, and the request might violate privilege as a matter of English law.
On 10 August 2022 the US Bankruptcy Court granted the relief sought by the trustee.
The Respondent has appealed, and sought to stay the part of the order requiring him to send the letter the Harcus Parker. No other part of the order was the subject of a stay application. The stay application was heard on 30 August 2022 but at the time of the hearing before this court on 20 December 2022 had not yet determined.
The Applicant has brought contempt proceedings in the US relating to the Respondent's failure to comply with the terms of the declaratory order, insofar as it relates to transfer of the debtor's shares in Ace Decade to the trustee. The extent of the Respondent's ownership of Ace Decade and Dawn State appears to be in dispute, although the US Bankruptcy Court has made findings about it. In any event, it is not necessary on this application to make any findings about the ownership position.
The present application
As described above, the present application is for recognition of the foreign proceedings in the US Bankruptcy Court, and for disclosure.
Recognition
The Applicant's recognition application is unopposed. I indicated at the end of the hearing on 20 December 2022 that I was satisfied that this was an appropriate case for recognising the foreign proceeding. I set out below, in brief, my reasons for reaching this conclusion. As it was described by Warren J in Re Transfield ER Cape Ltd [2010] EWHC 2851 (Ch) at [1], “the court's function on recognition is something of a ‘tick box’ exercise”. It is nevertheless necessary to ensure that all the boxes are ticked.
The...
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