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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Global Cord Blood Corporation (CE) | USOTC:CORBF | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.00 | 1.00 | 1.00 | 1.00 | 440 | 01:00:00 |
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GLOBAL CORD BLOOD CORPORATION
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By:
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/s/ John Royle
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Name:
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John Royle
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Title:
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Joint Provisional Liquidator by Order of the Grand Court of the Cayman Islands
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To: All Shareholders
By e-mail
29 May 2024
Dear Shareholders,
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Grant Thornton Specialist
Services (Cayman) Limited
2nd floor Century Yard,
Cricket Square,
PO Box 1044,
Grand Cayman, KY1-1102 Cayman Islands
T +1 (345) 949 8588
F +1 (345) 949 7120
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1.
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Any shareholder who wishes to provide any additional comments or queries regarding the JPLs’ proposed terms of remuneration and
the JPLs’ remuneration for the Fee Approval Period should do so in writing to the JPLs by no later than 1 July 2024. Any communications should be sent by email to qcbcipls@uk.qt.com. To the extent appropriate, the JPLs intend to file a short affidavit with the Court in advance of the Hearing Date which addresses any additional comments or queries received.
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2.
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Any shareholder who intends to appear at the hearing of the Summons must notify the JPLs and confirm whether they support or oppose the
orders being sought by no later than 9 July 2024 so as to ensure that the hearing of the Summons proceeds in an orderly manner.
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Chartered Accountants. Grant Thornton Specialist Services (Cayman) Limited is a member firm of Grant Thornton International Ltd
(GT1L) and a subsidiary of Grant Thornton UK LLP. GIlL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are
not liable for one anther’s acts or omissions. Please see grantthomton.ky for further details. Subject to local regulations.
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granfthornton.ky
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COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
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1. |
the Joint Provisional Liquidators’ remuneration of US$10,274,854 incurred during the period 22 September 2022 to 30 September 2023 be approved and paid out of the assets
of the Company;
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2. |
the costs of this application be paid from the liquidation estate as an expense of the provisional liquidation; and
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3. |
such further and/or other relief as this Honourable Court deems fit.
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Q |
Please provide a breakdown of fees charged by the JPLs, disbursements, legal fees and expenses as well as your fee narratives.
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A |
The JPLs have prepared a report dated 14 March 2024 in respect of the JPLs’ fees and disbursements for the Fee Approval Period (the “Fee Report”) which
contains all the information reasonably required to enable the Court and the Company’s contributories to make an informed decision about the reasonableness of the JPLs’ proposed terms of remuneration and the JPLs’ remuneration and
disbursements for the Fee Approval Period. Any registered shareholder who does not already have a copy of the Fee Report may request a copy from the JPLs.
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Report
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Update period
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JPLs’ fees and
disbursements (aggregate)
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First Report dated 20 October 2022
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As at 30 September 2022
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US$875,000
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Second Report dated 1 December 2022
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As at 31 October 2022
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US$3,078,000
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Third Report dated 1 March 2023
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As at 31 December 2022
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US$5,177,000
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Fourth Report dated 1 June 2023
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As at 31 March 2023
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US$8,350,000
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Fifth Report dated 1 September 2023
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As at 30 June 2023
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US$9,186,000
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Sixth Report dated 1 December 2023
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As at 30 September 2023
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US$10,271,000*
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Workstream
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JPLs’ Fees
(US$)
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Disbursements (US$)
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Total
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%
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Control of HK Subsidiaries and
associated litigation |
2,019,391
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67,534
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2,086,925
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20.31
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Investigative activities to identify and recover assets
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1,934,109
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67,663
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2,001,772
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19.48
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Control of PRC Subsidiaries and associated litigation
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838,296
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763,939
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1,602,235
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15.59
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Liquidity considerations
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847,246
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-
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847,246
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8.25
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Cayman Court applications and filings
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714,838
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-
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714,838
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6.96
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Books and records, recovery and review
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641,357
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33,974
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675,331
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6.57
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Service provider management and corporate governance
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619,599
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-
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619,599
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6.03
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Regulatory compliance, statutory reporting and obligations
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498,577
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2,141
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500,718
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4.87
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Stakeholder communication
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430,196
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-
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430,196
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4.19
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Control and oversight of BVI and Cayman Subsidiaries
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389,758
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34,330
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424,088
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4.13
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Additional Cellenkos Transaction activities and US investigations
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371,907
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-
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371,907
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3.62
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Total
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9,305,273
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969,581
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10,274,854
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100
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Quarterly period
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JPLs’ fees and disbursements incurred in that quarter
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Monthly (mean) average burn rate
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22 September 2022 to 31
December 2022
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US$5,177,000
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US$1,725,666
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1 January 2023 to 31 March 2023
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US$3,173,000
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US$1,057,666
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1 April 2023 to 30 June 2023
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US$836,000
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US$278,666
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1 July 2023 to 30 September 2023
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US$1,085,000
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US$271,250
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Q |
Please can you provide a breakdown of legal fees by law firm and explain the purpose of the engagement of each law firm and please explain why you aren’t seeking approval of
their costs?
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A |
By the Fee Approval Application, the JPLs are seeking the Court’s sanction for approval of their remuneration incurred during the Fee Approval Period. Legal fees incurred during the
same period do not require Court sanction and are not the subject of the application. The JPLs’ power to engage legal counsel to assist them with the discharge of their function arises by virtue of paragraph 7 of the order of the Cayman
Court of 22 September 2022 appointing the JPLs (the “Appointment Order”).
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Q |
What is your reason for utilising a team of over 80 people? How many of the Grant Thornton team are fluent Mandarin speakers?
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A |
The JPLs’ mandate and work undertaken during the Fee Approval Period needs to be viewed in the context of the significant value of the Company and its subsidiaries (including, inter alia, the Company’s subsidiaries in Hong Kong and the People’s Republic of China) (the “Group”) and the steps taken by the JPLs to preserve value for the Company’s
stakeholders in circumstances where serious allegations have been made against the Company’s founders and the Company’s former directors in relation to attempts to defraud the Company and its shareholders collectively.
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Q |
Why are over 25 staff from Grant Thornton UK being used when the Group has no link to the UK (either operations or litigation)?
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A |
The JPLs are assisted by the forensics team based in the UK to investigate various aspects of the case. An integrated approach to forensics, valuation and asset recovery is
adopted by the JPLs to conduct the provisional liquidation of the Company. The forensics team is responsible for collecting data from various sources, reconstructing and analysing collected data, corporate intelligence,
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A |
No UK VAT has been charged, as all the fees and charges pertain to the liquidation of a Cayman Islands company.
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Q |
What is the justification for the non-Cayman offices being remunerated at the Cayman liquidation rates when their market rates are much lower? How can you justify the
reasonableness of your charge out rates?
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A |
The hourly rates for liquidators are prescribed and set out in the schedule to the IPR. This provides a minimum and maximum band to each grade of staff working on a liquidation.
The IPR also pre-determine a range of charge out rates per grade which includes any related firm which the liquidator would delegate work to (see Part 3, paragraph 11, subsection 2 of the IPRs). Accordingly, the hourly rates charged to the
Company are in alignment with the IPR and market rates.
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Q |
Did the JPLs seek competitive bids from other professional services firms for any of the investigative and administrative work that they ultimately directed to themselves at
Grant Thornton? What checks and balances were implemented to avoid conflict and prevent abuse ahead of the JPLs appointing themselves and affiliated parties as directors within the Group?
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A |
The primary mandate of the JPLs was to take control of the group in order to preserve value for the benefit of all shareholders. Grant Thornton’s offices in the Cayman Islands,
the UK and Hong Kong are member firms of Grant Thornton International Limited. The JPLs are entitled to use their staff from the member firms, and are not required to seek competitive bids from other advisory firms. The JPLs are able to
supervise the work of their staff precisely because they are employed by the member firms. All work has been undertaken at the direction of, and under the supervision, the JPLs.
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A |
The JPLs are officers of the Court and were appointed by the Court on the terms of the Appointment Order. The Appointment Order and the applicable procedural rules provide that
the JPLs are entitled to be paid out of the assets of the Company for their remuneration incurred, subject to approval by the Court.
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Q |
What opportunity will be provided to shareholders to make their views known in respect to your fees and what can they do if they think your fees are unreasonable or that you
have gone outside of the Court’s mandate?
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A |
The JPLs intend to give notice of the Fee Approval Application to all members so that any member who wishes to attend the hearing of the Fee Approval Application and make
submissions to the Court on the relief sought may do so.
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Q |
The Fee Report shows that JPLs spent over $1.5 million on “Liquidity Consideration”. Please further clarify the details and nature of this amount and provide an explanation
for these substantial expenses and clarify why the Company should bear the costs incurred by the JPLs in their fundraising efforts
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A |
The Fee Report confirms that fees of US$847,246 have been incurred on this workstream during the Fee Approval Period. A breakdown of the work undertaken on this workstream is
provided at section 10 of the Fee Report.
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Please see section 16 of the Fee Report. During the Fee Approval Period, the JPLs have incurred fees of US$430,196 on stakeholder communications including but not limited to Blue
Ocean.
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A |
There is no requirement for the resolutions to approve the JPLs’ Remuneration Agreement and the fees incurred during the Fee Approval Period to be special resolutions.
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A |
The JPLs’ most recent report to the Court is their Seventh Report dated 8 March 2024. Please see sections 5.5.1 to 5.5.6 of the Seventh Report for an update on the status of the
Cayman proceedings. The Seventh Report is available on the Company’s website.
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Q |
Why have you not set up an ad hoc liquidation committee to ensure that shareholder views are being taken into account?
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A |
There is no requirement for the JPLs to establish an ad hoc liquidation committee. In the absence of the Company maintaining a register of members which complies with the
requirements of the Companies Act, there are also issues as to the validity of certain purported shareholdings. This is further complicated by extant disputes relating to certain share issuances shortly before the JPLs were appointed.
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Has the Group’s turnover remained the same since your appointment? Have any of the Group’s licenses been affected by your appointment? Were any of the underlying businesses
damaged by the change in control from former management to you?
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A |
The JPLs’ investigation into the financial status of the Group (including its turnover) is ongoing. Such investigations into the true financial position of the Company, past and
present, has been significantly hindered by the actions of bad actors who have prevented the JPLs from obtaining and reviewing the books and records of the Company. We refer you to section 12 of the Fee Report for further information.
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Q |
Has the Hong Kong Court made any cost orders against former management for work related to the Hong Kong litigation and can this be used to set-off some of the fees incurred by
the JPLs in respect to the Hong Kong litigation workstream?
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A |
The Hong Kong Court has made costs orders against former management. Please see paragraphs 5.7.12 to 5.7.13 of the JPLs’ Seventh Report for an update on the status of the Hong Kong
litigation (including on the matter of costs). The Seventh Report is available on the Company’s website. As indicated in the report, the orders made by the Hong Kong Court have been appealed by Tina Zheng, Albert Chen and Prime Intelligence
Management Limited.
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Q |
Having been awarded control of the Hong Kong entities, why have the JPLs not proceeded to expeditiously take control of the 100% owned operating subsidiaries in the PRC (which
should have significant cash and cash generating capacity)? How have the funds received to date been utilised by the JPLs?
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A |
As detailed in Section B of the Sixth Affidavit of Margot Maclnnis filed in support of the Fee Approval Application, the three most significant key workstreams during the Fee
Approval Period were (i) control of the Hong Kong Subsidiaries and associated litigation; (ii) control of GCBC’s indirectly owned operating PRC subsidiaries (the “PRC Subsidiaries”) and associated
litigation and (iii) investigative activities to identify and recover assets. The JPLs’ fees incurred in relation to these workstreams during the Fee Approval Period amounts to 51% of the total fees incurred. They were clearly a priority
for the JPLs and central to their mandate of preserving the assets of the Company for the benefit of its shareholders.
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Q |
Why hasn’t the JPLs / GCBC joined the NY derivative suit led by MW Gestion against the former directors/management?
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A |
The JPLs are continuing to monitor the US derivative suit. Whilst the JPLs are not a party to the proceedings, the JPLs’ Reports have been filed in the action and thus the US Courts
are aware of the JPLs’ commentary concerning the Company. The JPLs do not otherwise consider it to be an efficient use of the Company’s (finite and limited) resources to actively participate in these proceedings at this point in time.
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Q |
Why is the Petitioner “in a unique position to have a depth of background in respect to the Company”? Surely there should have been, and should continue to be, parity of
information available to all shareholders?
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Blue Ocean is the largest shareholder of the Company and therefore has the largest economic interest in the liquidation. As the Petitioner, the JPLs have sought to constructively
engage with Blue Ocean as its interests and desire to preserve value and prevent the fraudulent disposition of the Company’s assets are aligned with shareholders collectively.
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Q |
Who is the party that provided the US$7.1 million of interim funding referred to in the fee report and please can you provide copies of the underlying loan agreement? Please
clarify if such arrangement has impacted the JPL’s independence?
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A |
This name of the party is confidential pursuant to the terms of the loan agreement. The arrangement has not impacted the JPLs’ independence. As court appointed officers, the JPLs
are fully aware of their duties and to whom such duties are owed.
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Q |
Why is the interim funder receiving 10% interest on monies lent when the rest of the shareholders are suffering?
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A |
The terms of funding were the best available having regard to all of the circumstances. A 10% interest rate on a loan being provided to a company in provisional liquidation is a
competitive rate of lending, particularly given the factual scenario of the Company.
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Q |
Please provide a fulsome explanation of the ideas that have been floated, and by who, regarding a share issue? What sort of terms are being considered, and who would receive
the shares? Will a vote and sanction from the Cayman Court be sought ahead of share issuance?
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The JPLs are exploring options to raise funding and will update all shareholders and the Court in due course. The Company’s assets are illiquid and it needs
to raise funding in order to fund the costs of the liquidation which in turn is required to preserve the value in the Company’s assets for the benefit of all shareholders. Any funding arrangement, whether by debt or equity, will require the
sanction of the Cayman Court and that application will be on notice to all shareholders.
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