Matthew Hardwick KC success for the Industrial and Commercial Bank of China (Macau) Limited in USD420m Insolvency Dispute

Matthew, instructed by Walkers and Clifford Chance, is retained by ICBCM (PRC’s largest bank by asset size) in order to recover HKD3.3bn (cUSD420m) against BVI company, Rich Region Holdings Limited. Rich Region borrowed this sum on 10 December 2018 in order to finance a luxury residential real estate project in Ho Man Tin, Hong Kong. Following a number of supplemental agreements, formal demands and extensive negotiation for additional security, on 5 July 2022 ICBCM issued a statutory demand.

In an application supported by 4 lengthy affidavits and voluminous documentation, Rich Region applied to set aside ICBCM’s statutory demand (IA 2003, s157(1)) on the grounds that ICBCM (1) had made false representations in the context of certain security demands (giving rise to an estoppel and/or collateral agreement); and in any event (2) was a secured creditor with security that exceeded the value of the debt.

In an important success for ICBCM, Small Davis J (Ag) accepted Matthew’s submissions that: (1) insofar as statements were made as to the nature of the additional security they were (a) true; and (b) in any event not relied upon [30-36] (indeed Rich Region’s contrary claims were “inconsistent with the documentary evidence and seriously misleading”); and (2) Rich Region had failed to establish that the value of the security exceeded the amount of the debt [56-59]. On 13 September 2023 Mangatal J. refused Rich Region’s application for a stay; and on 6 November 2023 Wallbank J. made a final liquidation order.

This robust rejection of a debtor’s attempt to circumvent the insolvency machinery by relying on a “cloud of objections on affidavit” is welcome. As noted by the Judge [37] this was “a classic example of the wisdom of Neuberger J…in Re Richbell Strategic Holdings Ltd” that “A judge, whether sitting in the Companies Court or elsewhere, should be astute to ensure that, however complicated and extensive the evidence might appear to be, the very extensiveness and complexity [are] not being invoked to mask the fact that there is, on proper analysis, no arguable defence to a claim, whether on the facts or the law”.

The judgment can be found here: Rich Region Holdings Limited v Industrial and Commercial Bank of China (Macau) Limited BVIHC (COM) 2022/0134.