Scenario 3 - Liquidation Advisory / Litigation Support
Scenario 3 - Liquidation Advisory / Litigation Support
The Summary
This case is about a businessman’s encounters with a liquidator of one of his business entities which led to his grievances of the liquidator’s conducts, competency and conflicts of interest; the matter culminated in the businessman’s litigation suit against the said liquidator. We rendered advisory services, professional opinion and discussed with the lawyers in this regard. The Court ordered the liquidator to relinquish his office.
The Backdrop
A businessman had been the sole director each of several business entities in a group structure of a wholly owned subsidiary (the “HollySub”), an immediate holding company (the “ImmCo”) and an ultimate holding company (the “UltiCo”).
The businessman owned 50% of the capital of UltiCo, his two other partners held the remaining 50%.
One of the shareholders of UltiCo wound it up due to insolvency. The liquidator appointed at the UltiCo requested the said businessman to resign as the sole director of the ImmCo. The liquidator after that passed a written resolution for UltiCo appointing himself as the sole director of the ImmCo, in place of the said businessman.
In his capacity as the sole director of ImmCo, and his dual role as the liquidator of UltiCo, he further passed another resolution to wind up ImmCo for its insolvency, and appointed himself (the said same liquidator of UltiCo cum the sole director of ImmCo) as the liquidator of ImmCo.
A series of events happened during the course between the said same liquidator and the businessman as the sole director of and in relation to the operations of the HollySub that was still a going concern. These events led to prevalent tensions between the parties after the ImmCo was wound up, and caused the businessman to have serious reservations of the said liquidator’s conducts, competency and conflicts as he perceived. The Court ordered the liquidator to relinquish his office.
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