In The Joint Provisional Liquidators of Seahawk China Dynamic Fund  HKCFI 1994, Harris J granted recognition of and assistance to the provisional liquidators of Seahawk China Dynamic Fund, a solvent entity, and at the same time took the opportunity to inform the banks and other organisations that provisional liquidators are able to exercise the more conventional powers of a company’s agent in Hong Kong which are expressly provided for in the order of their appointment.
This case involves a Cayman-incorporated company (“Company“) which is solvent and in provisional liquidation in the Cayman Islands. The joint provisional liquidators (“JPLs”) were appointed by the Cayman Court.
The JPLs have been trying to take possession of the Company’s assets in Hong Kong, which, expectedly, required the JPLs to obtain a local recognition order.
There were 2 issues before the Court:-
In response to the first issue, the Court held that common law principles of recognition and assistance had no application to liquidators of a solvent company. Instead, the principles of conflict of laws which are independent of those of cross-border insolvency should be engaged, and as a matter of private international law, if a foreign court of a company’s place of incorporation has made an order appointing a liquidator (as in this case), the liquidator will be able to act as the agent of the company with the powers which the liquidator has as a consequence of his appointment.
In response to the second issue, the Court held that while the COMI considerations discussed in the Global Brands case still stand, they would not be relevant if the liquidator of a solvent company was merely seeking an order confirming that he had particular powers by virtue of his appointment in the company’s place of incorporation, as in this case. Harris J also explained that if the foreign liquidation was a solvent liquidation, it would not fall within the principle of modified universalism in the first place, and would be more akin to a ‘private arrangement’ as opposed to a collective insolvency proceeding.
In a message to the banks and “sophisticated organisations”, Harris J reminded them of what he said in his earlier cases, A Co v B  4 HKLRD 374 and Capital Asia LP v DBS Bank (Hong Kong) Ltd  HKEC 2377, that it should not be necessary for foreign liquidators, whether it be of a solvent or insolvent company, to obtain a local court order in order to access the company books and records. (For solvent companies, the liquidators’ ability to do so could stem from the powers given to them in the company’s place of incorporation where the order of appointment was made.) If banks insist that the foreign liquidators obtain a local court order to exercise in Hong Kong no more than the conventional powers of a company’s agent, then they face the risk of an adverse costs order, if made a party to the application.
It is not entirely clear though from Harris J’s judgment in the latest Seahawk case whether it is still necessary for foreign liquidators to obtain a local court order to deal with the company’s assets in Hong Kong. It would appear that it remains necessary to do so, at least for an insolvent liquidation.