In the Matter of Pacific Harbor Asia Fund I, Ltd (In Official Liquidation) - Judgment

¶ IN THE GRAND COURT OF FINANCIAL SERVICES DI- IN THE MATTER OF THE AND IN THE MATTER OF PA- IN CHAMBERS F THE CAYMAN ISLANDS VISION CAUSE NO. FSD 139 O E COMPANIES LAW (2016 REVISION) CHTC HARBOR ASIA FUND I, LTD. (In Official F 2017 (RJM) Liquidation) Appearances: Mr. Ms. Before: The Heard: 4th Judgment Delivered: 6 D Ben Holden of Conyers, Dill & Pearman for Mr. David Cly Manning of Campbells for the Joint Official Liquidenifer Colegate of Collas Crill for Mr. Lai Kar Yan, J. Hon. Mr. Justice Robin McMillan Dec 2017 Dec 2017 HEADNOTE Griffin, JOL affors (“JOLs”) OL Power of the Court to order

¶ [1] By a Supervision JOLs of the Com- Batchelor. 171206 In the Matter of payment of fees and expenses – Limitation on those p- jurisdiction of Court. Judgment: Order dated 27 August 2017 Mr. Griffin and Mr. Lai Kanany, Mr. Griffin having previously been Voluntary Li- Pachtor Harbor Asia Fund I, Ltd. FSD 139 of 2017 (RJM) Powers - Scope of insolvency Kar Yan were appointed as liquidator along with Mr. John
2. The Master Fund offshore feeder Master Fund, whi-

¶ [3] The two Limited company, holding

¶ [4] The Master Fund

¶ [5] The assets of the structure comprised the Company (a Cayman Island fund, a Delaware feeder fund (a company incorp- ch is a Cayman Islands Limited Partnership. Partners of the Master Fund are the Company and 77% and 23% of the partnership interest respectively). is operated through its General Partner GP Ltd ("GP"). The Company itself comprise its 77% partnership inter- nds exempted company) as est in the Master Fund and some limited cas-

¶ [6] The Master Fund are now problem-

¶ [7] The Master Fund

¶ [8] However, Aggregates in the Con-

¶ [9] The issue which order to realize Company holds a hold in a bank account in the Netherlands. made investments in distressed debt obligations in re- tatic recovery targets for the Master Fund, which is not has encountered economic difficulties, and it has been ator Solutions PLC (an affiliated entity of Deutsche pany through these sub-funds. arises is as to the remuneration of Mr. Lai who was he Master Fund's assets, and he is solely responsible for 77% of the Master Fund assets, should Mr. Lai's ren- tance Asia-Pacific region, which itself in liquidation. in wind-down. Bank) holds 98.9% of the appointed by this Court in e for such matters. As the uneration be based on the Company's assets.

¶ [10] Ms. Colegate and/or of the assets, even 171206 In the Matter of or on the broader 100% of the Master Fund's assets? does that Mr. Lai was appointed to realize the assets in though the Company's recovery is limited to 77 % of the Master Fund, namely all the assets. 2
11. She contends that compensated for failing outside the should be compen-

¶ [12] Ms. Colegate as furthermore with it realizing the assets of the Master Fund should be given that it entails costs incurred in connection with liquidation estate of the Company which cannot be nsated for in any event as a matter of fairness. eras that this is consistent with both the Company the law of equity. fully rather than partially h the realization of assets paid from that estate but es law and the CWR, and

¶ [13] Mr. Hobden how- its creditors and as Mr. Lai’s position.

¶ [14] The Court’s atten- as JOL in relation Company itself, a 20, r. 1 (2) of the

¶ [15] I accept that the Cayman Islands in ever states that this approach is not in the best inter- stakeholders; and he points out that there is no legal certainly in the law of this jurisdiction. tion has been drawn to the proposition that Mr. Lai’s to realizing the assets of the Master Fund are expen- and Mr. Hobden cites sections 109 and 103 of the Com- CWR, pany Order of payments which I can approve is that governance by solvency law. trusts of the Master Fund and authority as such to support remuneration and expenses es in the liquidation of the banies Law, as well as Order evened by and stipulated by

¶ [16] This Court’s pow-

¶ [17] In other words, the Court to treat the liquidation regime no inherent juris- 171206 In the Matter of ders extend to the winding up of the Company and to no the Master Fund is not in liquidation and it is not appre- he Master Fund, which is a separate exempted line ce or subject to a liquidation regime in any formal way. scription to vary priority of payments as laid down by law. Port Author Asia Fund I, Ltd. FSD 139 of 2017 (RJM) other entity. private or permissible for the nited partnership, under a Furthermore, the Court has
18. The point in issue which have been

¶ [19] I therefore direct assets of the Master Fund accordance with that the remuneration of Mr. Lai incurred in respect of submitted. the Business Fund and/or by Mr. Griffin to investigate the are payable, and payable only, as an expense in the liquidation of the CWR. This is the right way to proceed and the only lengthy written arguments of work done to realize the ness, dealings and affairs of liquidation of the Company in way to proceed.

¶ [20] The costs of this McMillan J Judge of the Grand Court application shall be paid as costs in the liquidation. 171206 In the Matter of Page 4 of 38 (Roburbor Asia Fund I, Ltd. FSD 139 of 2017 (RJM)