In this thoroughly new and groundbreaking case it was held that where a creditor has already filed a winding up petition in respect of a company: (1) not only may the directors of the company parry by themselves applying for the appointment of JPLs; but (2) they may do so even without a shareholder resolution or express provision to do so in the company’s articles of association. This interpretation appears to contradict the English common law position In re Emmadart Ltd as well as the (most recently understood) common law position in the Cayman Islands: In the matter of China Shanshui Group Limited.

In circumstances where there is seemingly conflicting ratio decideni as to whether a board of directors can appoint a restructuring JPL without shareholder approval and/or authority from the constitutional documents, it is imperative that Court of Appeal guidance on the issue is obtained promptly.

Of particular interest to banks, bondholders, investors and debtors in the present case is that the Grand Court approved the Company’s application for the appointment of JPLs notwithstanding the fact that an extant creditor’s winding-up petition had already been filed and served on CHC.

In reaching his decision, Justice McMillan considered both the decision of Justice Jones In re China Milk Products Group Ltd [2011], where it was held that directors of an insolvent company would be allowed to present winding up petitions on behalf of their companies without approval by the shareholders; and the decision in In the Matter of China Shanshui Group Limited [2015], where Justice Mangatal J. reached a divergent conclusion by deciding that directors of a company do not have standing or authority to present a winding-up petition nor the power or authority to apply for the appointment of JPLs unless they were expressly authorised to do so by the company’s articles of association or a valid shareholders resolution had been passed.

In CHC, Justice McMillan distinguished both China Milk and China Shanshui on the basis that they had no bearing on the present situation where there was a separate creditor winding-up petition in existence, which was then followed by an application by the Company, acting by its directors, for the appointment of JPLs.

An interesting technical point for appeal may well be whether Order.4, rule.6 of the Cayman Winding Up Rules 2008 presents an impassable obstacle to the reasoning in CHC since it seems to provide that an application for JPLs by a company may only be made when the winding-up petition is also presented by the company itself.