FEDERAL COURT OF AUSTRALIA
Abate, in his capacity as Liquidator of Onix Capital SA [2017] FCA 751
ORDERS
CARLOS ANTONIO PARADA ABATE, IN HIS CAPACITY AS LIQUIDATOR OF ONIX CAPITAL SA Plaintiff | ||
AND: | Defendant | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. Pursuant to section 6 of the Cross-Border Insolvency Act 2008 (Cth) (“Act”), Article 15 and clause 1 of Article 17 of the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law”) and rule 15A.3 of the Federal Court (Corporations) Rules 2000 (Cth) (“Rules”), an order that the proceeding numbered C-9217-2016 of the 30th Civil Court of Santiago in Chile relating to the defendant (“the Foreign Proceeding”) be recognised as a “foreign proceeding” within the meaning of Article 2(a) of the Model Law.
2. Pursuant to section 6 of the Act and clause 2(a) of Article 17 of the Model Law, an order that the Foreign Proceeding be recognised as a “foreign main proceeding” within the meaning of Article 2(b) of the Model Law.
3. Pursuant clause (d) of Article 2 of the Model Law, the plaintiff be and is recognised as a “foreign representative”.
4. All powers available to a liquidator appointed under Pt 5.6 of the Corporations Act 2001 (Cth) be made available to the plaintiff, until he ceases to be a foreign representative in relation to the Foreign Proceeding or until the conclusion of the Foreign Proceeding (whichever is the earlier).
5. Pursuant to section 6 of the Act and Article 21(1)(d) of the Model Law, the plaintiff may issue orders for production for delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities in the form or substantially in the form annexed to the originating process in these proceedings and marked “A”, “B”, “C” and “D”.
6. Each party and each creditor or person claiming to be a creditor of the defendant, and any other person affected by these orders, has liberty to apply on 3 business days’ notice.
7. Rule 15A.7 of the Rules be dispensed with and in lieu thereof the plaintiff is to:
(a) notify creditors of the orders made by a notice of filing in the Chilean Insolvency Proceedings and by publishing the orders in the Boletín Concursal, a publication of bankruptcy-related notices in Chile;
(b) notify the Superintended of the orders by sending the orders to the Superintendente de Insolvencia y Reemprendimient, Hermanos Amunátegui N° 228, Santiago de Chile;
(c) notify Mr Alberto Samuel Chang Rajii of the orders made by:
(i) publishing the orders in the Boletín Concursal, a publication of bankruptcy-related notices in Chile
(ii) sending a copy of the orders by email to Alex Manuel Carocca Perez Moneda 920, Oficina 904 Santiago, Chile at email address acaroccap@gmail.com and Ms Ivanna Alquinta at alquinta.ivanna@gmail.com.
8. An order that the costs of this proceeding be costs of the liquidation of the defendant.
9. To the extent necessary, in connection with order 5 above, compliance with rule 15A.8 of the Rules be dispensed with.
THE COURT NOTES THAT:
A. The orders for production in order 5 are to be made returnable before a registrar on 3 July 2017 with the last date for service of the orders being 23 June 2017.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
GLEESON J:
1 The plaintiff applied for recognition of a foreign proceeding pursuant to the Cross-Border Insolvency Act 2008 (Cth) (“Act”), and consequential relief including orders for the production of documents. On 21 June 2017, after hearings on 31 May, 9 June and 21 June 2017, I made the orders sought. These are my reasons for making those orders.
Background to application
2 By s 6 of the Act, subject to that Act, the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (“Model Law”) has the force of law in Australia. The Model Law is contained in Sch 1 to the Act.
3 The proceeding for which recognition was sought is case no. C-9217-2016 (“Chilean proceeding”) in the 30th Civil Court of Santiago, Chile (“Chilean Court”).
4 The plaintiff is the liquidador or liquidator of the Chilean incorporated company, Onix Capital S.A. (“company”), appointed under Chilean Law No. 20.720 (“Chilean Insolvency Law”). He is a Chilean attorney at law, has been a member of the Bar Association of Santiago since 1994. Since 2003, the plaintiff has been registered on Chile’s Trustee List, a public record comprising individuals eligible to act as liquidators in Chile, appointed by the Superintendente di Insolvencia y Reempredimiento, the superintendent of insolvency and restructuring (“Superintendente”). The Superintendente is a person named by the Chilean Ministry of the Economy and who supervises bankruptcy proceedings and liquidators to ensure compliance with the law.
5 The company was placed into compulsory liquidation on the application of a creditor, Inversiones Aguasoro Limitada. The creditor’s petition was in respect of the company’s failure to pay its liabilities when due, including non-payment of a promissory note constituting an enforceable security in the amount of 70 million Chilean pesos (approximately AUD$141,542.81 as at the date of the swearing of the plaintiff’s affidavit). On 4 May 2016, the plaintiff was appointed as liquidador provisional (provisional liquidator) by order of the Chilean Court in the Chilean proceeding, and subsequently ratified as liquidador by the Chilean Court on 29 June 2016.
6 On 25 July 2016, the plaintiff was authorised by order of the Superintendente, for a maximum duration of six months, to act as liquidator with respect to the forced liquidation bankruptcy proceeding of the company pursuant to the provisions set forth in Art 304 of the Chilean Insolvency Law, and empowered to take such steps as are necessary to discharge the authorisation in six jurisdictions including the United Kingdom, the United States of America and Australia. The original authorisation was extended for an additional six months on 24 January 2017.
7 On 4 November 2016, the liquidation of the company pursuant to the Chilean Court’s order dated 4 May 2016 was recognised as a foreign main proceeding in accordance with the Model Law by the United Kingdom High Court of Justice.
8 On 21 December 2016, the United States Bankruptcy Court, Southern District of Florida, Miami Division, recognised the foreign bankruptcy proceeding of the company pending before the Chilean Court as a foreign main proceeding.
9 In support of the application, the plaintiff relied on the following evidence:
(1) his affidavit sworn 11 May 2017 and the accompanying exhibit, marked “CAPA-1”; and
(2) four affidavits of John Mitchell, the plaintiff’s solicitor, affirmed 23 May 2017, 31 May 2017, 8 June 2017 and 21 June 2017.
Model Law on Cross-Border Insolvency
10 Relevantly, and subject to the Act, the Model Law applies where assistance is sought in Australia by a foreign representative in connection with a foreign proceeding: Art 1(a).
11 Article 2 of the Model Law contained the following relevant definitions:
(1) “foreign proceeding” means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation;
(2) “foreign main proceeding” means a foreign proceeding taking place in the State where the debtor has the centre of its main interests; and
(3) “foreign representative” means a person or body, including one appointed on an interim basis, authorised in a foreign proceeding to administer the reorganisation or the liquidation of the debtor’s assets or affairs or to act as a representative of the foreign proceeding.
12 Article 4 of the Model Law provides that the functions referred to in the Model Law relating to recognition of foreign proceedings and co-operation with foreign courts shall be performed by a specified court or courts or other authority. Section 10(b) of the Act provides relevantly that, if the functions relate to a proceeding involving a debtor other than an individual, the Federal Court of Australia is taken to be specified in Art 4 as a court competent to perform the functions referred to in the Model Law relating to recognition of foreign proceedings.
13 Article 6 provides:
Nothing in this present Law prevents the court from refusing to take an action governed by the present Law if the action would be manifestly contrary to the public policy of this State.
14 Article 9 provides that a foreign representative is entitled to apply directly to a court in Australia.
15 Article 15 of the Model Law provides:
1. A foreign representative may apply to the court for recognition of the foreign proceeding in which the foreign representative has been appointed.
2. An application for recognition shall be accompanied by:
(a) A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or
(b) A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or
(c) In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative.
3. An application for recognition shall also be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.
4. The court may require a translation of documents supplied in support of the application for recognition into an official language of this State.
16 Section 13 of the Act provides:
In addition to the requirement in paragraph 3 of Article 15 of the Model Law (as it has the force of law in Australia) that an application for recognition be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative, the application must be accompanied by a statement identifying:
(a) all proceedings under the Bankruptcy Act 1966 in respect of the debtor; and
(b) any appointment of a receiver (within the meaning of section 416 of the Corporations Act 2001), or a controller or a managing controller (both within the meaning of section 9 of that Act), in relation to the property of the debtor; and
(c) all proceedings under Chapter 5 of the Corporations Act 2001, or section 601CL of that Act or Schedule 2 to that Act, in respect of the debtor;
that are known to the foreign representative.
17 Article 16 of the Model Law provides:
1. If the decision or certificate referred to in paragraph 2 of article 15 indicates that the foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2 and that the foreign representative is a person or body within the meaning of subparagraph (d) of article 2, the court is entitled to so presume.
2. The court is entitled to presume that documents submitted in support of the application for recognition are authentic, whether or not they have been legalized.
3. In the absence of proof to the contrary, the debtor’s registered office, or habitual residence in the case of an individual, is presumed to be the centre of the debtor’s main interests.
18 Article 17 provides:
1. Subject to article 6, a foreign proceeding shall be recognized if:
(a) The foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2;
(b) The foreign representative applying for recognition is a person or body within the meaning of subparagraph (d) of article 2;
(c) The application meets the requirements of paragraph 2 of article 15;
(d) The application has been submitted to the court referred to in article 4.
2. The foreign proceeding shall be recognized:
(a) As a foreign main proceeding if it is taking place in the State where the debtor has the centre of its main interests; or
(b) As a foreign non-main proceeding if the debtor has an establishment within the meaning of subparagraph (f) of article 2 in the foreign State.
3. An application for recognition of a foreign proceeding shall be decided upon at the earliest possible time.
4. The provisions of articles 15, 16, 17 and 18 do not prevent modification or termination of recognition if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist.
19 Thus, if certain matters are established, the foreign proceeding must be recognised, unless recognition would be manifestly contrary to the public policy of Australia: Kapila, re Edelsten [2014] FCA 1112; (2014) 320 ALR 506 (“Re Edelsten”) at [22].
20 Division 15A of the Federal Court (Corporations) Rules 2000 (“Corporations Rules”) sets out rules concerning proceedings under the Act. The applicant sought dispensation from various of the rules, considered below.
21 Rule 15A.3 provides relevantly:
(1) An application by a foreign representative for recognition of a foreign proceeding under article 15 of the Model Law must be made by filing an originating process in accordance with Form 2.
(2) The originating process must:
(a) be accompanied by the statements referred to in article 15 of the Model Law and in section 13 of the Cross-Border Insolvency Act; and
(b) name the foreign representative as the plaintiff and the debtor as the defendant; and
(c) be accompanied by an affidavit verifying the matters mentioned in paragraphs 2 and 3 of article 15 of the Model Law and in section 13 of the Cross-Border Insolvency Act .
(3) When filing the originating process, the foreign representative must file, but need not serve, an interlocutory process seeking directions as to service, and the Court may give any directions about service, and make any incidental orders, that it thinks just.
(4) The plaintiff must serve a copy of the originating process and the other documents mentioned in subrule (2):
(a) unless the Court otherwise orders, in accordance with subrule 2.7 (1); and
(b) on any other persons the Court may direct at the hearing of the interlocutory process.
22 Rule 15A.7 provides relevantly:
(1) If the Court makes an order for recognition of a foreign proceeding under article 17 of the Model Law, or makes any order under article 19 or 21 of the Model Law, the plaintiff must, as soon as practicable after the order is made, do all of the following:
(a) have the order entered;
(b) serve a copy of the entered order on the defendant;
(c) send a notice of the making of the order in accordance with Form 21 to each person whose claim to be a creditor of the defendant is known to the plaintiff;
(d) publish a notice of the making of the order in accordance with Form 21, in a daily newspaper circulating generally in the State or Territory where the defendant has its principal, or last known, place of business.
(2) The Court may direct the plaintiff to publish the notice in accordance with Form 21 in a daily newspaper circulating generally in any State or Territory not described in paragraph (1) (d).
23 By Art 20, and subject to s 16 of the Act, upon recognition of a foreign main proceeding:
(1) commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities is stayed;
(2) execution against the debtor’s assets is stayed; and
(3) the right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended.
24 Article 21(1) of the Model Law provides, relevantly that, upon recognition of a foreign proceeding, whether main or non-main, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative, grant any appropriate relief, including:
(d) Providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities;
and
(g) Granting any additional relief that may be available to [a liquidator] under the laws of this State.
25 Rule 15A.8 of the Corporations Rules provides relevantly:
(1) If the Court has made an order for recognition of a foreign proceeding, any application by the plaintiff for relief under paragraph 1 of article 21 of the Model Law must be made by filing an interlocutory process, and any supporting affidavit, in accordance with Form 3.
(2) Unless the Court otherwise orders, an interlocutory process under subrule (1) and any supporting affidavit must be served, in accordance with subrule 2.7 (2), but on the following persons:
(b) any person that the Court directed be served with the originating process by which the application for recognition was made;
(c) any other person that the Court directs.
Background facts
26 The company was incorporated in the Commercial Register of Santiago, Chile on 19 March 2009. Alberto Chang Rajii (“Mr Chang”) owned 90% of its shares and his mother, Veronica Rajii Krebs, owned the remaining 10%. The registration document records that the domicile of the company is Santiago.
27 The company and another Chilean company called Grupo Arcano S.A. were part of a complex and opaque structure of companies in various jurisdictions, ultimately controlled by Mr. Chang. There are two such companies registered in Australia: Onix Capital Pty Limited and Future Solar Technologies Pty Limited (“Australian companies”). Mr Chang is director of each of the Australian companies. Shares in the Australian companies are held by companies associated with Mr Chang.
28 The plaintiff gave the following evidence concerning the business and management of the company:
(1) the business of the company was the management and investment of private investment funds in various specified asset classes and securities in Chile and abroad;
(2) all of the company’s offices and employees, the (former) members of its board of directors and its shareholders were located or principally resident in Chile;
(3) meetings of the board and shareholder meetings were held in Chile; and
(4) the company’s investors were mostly domiciled in Chile.
29 In particular, the plaintiff gave evidence that:
10. The Company did not have a licence to operate in the venture capital business in Chile. In fact, despite appearances, the Company was making offerings to the public without a licence, an offence under the Chilean General Banking Law No. 39 (the Chilean General Banking Law). Investments were made by the Company in alternative energy, social media, sciences, innovative technology, natural resources, consumer goods, real estate development and financial services in different jurisdictions.
11. The Company's principal business activities included accepting subscriptions from investors, ostensibly to make a profit for its investors by investing those funds.
12. Based on my investigation to date, although investors were induced to invest on the footing that Onix S.A. would make investments in the fields of alternative energy, social media, sciences, innovative technology, natural resources, consumer goods, real estate development and financial services in different jurisdictions, only a small fraction of the invested monies was actually used to purchase these investments. My understanding, based on my extensive investigations into the Company, is that in many cases, investors would receive promissory notes in exchange for their investments, guaranteed by Mr. Chang personally and by a Chilean company called Grupo Arcano S.A. (Arcano) or one of its related entities. Arcano and the Copmpany were part of a complex and opaque structure of companies in various jurisdictions, ultimately controlled by Mr. Chang.
30 The plaintiff also gave evidence that:
(1) Mr. Chang has been charged in Chile for alleged fraud, money laundering and violations of Chilean General Banking Law in relation to the investments made in the company.
(2) Mr. Chang and Onix Capital LLC (a United States company) have been sued by the United States Securities and Exchange Commission (SEC) (Case No. 1:16- cv-24678), in which it is alleged that Mr. Chang and Onix Capital LLC violated antifraud provisions of the United States securities laws by fraudulently raising approximately USD 7.4 million and misrepresenting to investors the investments offered, the use of the funds raised, and the background and financial success of Mr. Chang.
(3) In early 2016, Mr. Chang fled to Malta. Subsequently, the Prosecutor's Office in Chile (Ministerio Publico) commenced extradition proceedings against Mr. Chang. On 7 April 2017, the court in Malta denied Chile’s request for Mr. Chang's extradition
31 On about 21 November 2016, Mr Chang submitted a proposal for the reorganisation of his affairs in Chile that lists numerous assets in a number of jurisdictions, including six bank accounts in Australia either in Mr Chang’s name or in the name of the two Australian Companies. The plaintiff believes that assets listed by Mr Chang may have been acquired with the company's funds. The plaintiff is in the process of either securing these assets until their provenance has been determined, or attempting to obtain further information in connection with such assets to assist in the tracing and recovery process for the Company against Mr. Chang.
32 The plaintiff’s review of the affairs and assets of Mr Chang and the company is as yet incomplete, but he has determined that five of the six accounts referred to above are held with the Australia and New Zealand Banking Group Limited (“ANZ Bank”), and that, in addition, Mr Chang is the registered proprietor of an apartment in Sydney.
33 The plaintiff has identified evidence that has given him reason to believe that Mr Chang may have:
(1) instructed Donohoes Commercial Lawyers to purchase the apartment in Sydney;
(2) procured that 500 million Chilean pesos be transferred from the company’s account to his personal account for the purpose of purchasing AUD 960,000, the purpose of which in turn was the purchase of further property in Sydney; and
(3) otherwise caused the company’s assets to be distributed to Mr Chang for his personal use or the use of companies under his control.
Current financial position of the company
34 The plaintiff gave the following evidence:
21. My investigations into the affairs of the Company are still ongoing given the complexities of this matter and the affairs of the Company, but currently it appears and I verily believe that the Company has approximately 1,000 investors and liabilities in the amount of at least USD 120 million. These creditors comprise both individuals and institutions. Based on my investigation to date, I believe the Company does not have any Australian creditors. There are also alleged tax claims against the Company from the Chilean tax authorities in the amount of around USD 16-18 million, although the Company contests this liability.
22. At present, based upon my review of relevant banking documents and correspondence, the Company appears to have minimal assets in its own name. Its bank accounts (of which it had at least four, principally at Banco de Chile and Santander Chile) were largely emptied by Mr. Chang of approximately USD 5-10 million around three days before my appointment.
23. As a result of my investigations into the Company, I have identified a number of assets worldwide, held or controlled by Mr. Chang which I believe may have been acquired by funds transferred from the Company to Mr. Chang.
Steps proposed to be taken by the plaintiff
35 The plaintiff gave evidence that:
[27.] … [I]t is my intention in the near future to file a criminal complaint in Switzerland, where a substantial amount of Mr. Chang’s assets have been frozen by the Swiss government, and to make an application in the Isle of Man recognising the Chilean Insolvency Proceedings as a “foreign main proceeding” in accordance with its laws.
…
44. I wish to investigate the Company’s business, affairs and dealings, both in Chile and worldwide and to reconstitute its affairs as far as possible – this being an important aspect of my duties under Chilean Insolvency Law.
45. As part of this process, I wish to investigate the nature and extent of any activities undertaken in Australia that could be attributed (directly or indirectly) either to the Company or to its assets. I wish to investigate the possibility that assets in Australia may have been acquired using the Company's funds. As stated above, I have assembled evidence that Mr. Chang has caused or instructed cash assets of the Company to be diverted into his personal bank accounts or into bank accounts belonging to companies of which he is the sole or part legal or beneficial owner.
46. To this end, the activities of the Australian Companies, Onix Capital Pty Limited and Future Solar Technologies Pty Limited, and the Sydney Apartment, are of particular importance and interest to me.
47. I wish to make recoveries to the extent possible, including by taking proceedings and asserting such claims as may be available to me and the Company in respect of the above mentioned assets in Australia. I may also bring claims against Mr. Chang with a view to enforcing those claims against assets in Australia, which may be the subject of tracing claims.
Bankruptcy proceedings against Mr Chang
36 As noted above, the plaintiff gave evidence that, on about 21 November 2016, Mr Chang submitted a proposal for the reorganisation of his affairs. On an unspecified date, Mr Chang submitted a revised proposal which was annexed to Mr Mitchell’s first affidavit.
37 In his second affidavit, Mr Mitchell gave evidence on information and belief from the plaintiff’s US attorney, Arnoldo Lacayo, that:
(a) the Chang Revised Statement was considered and rejected by Mr Chang’s creditors at a meeting held on 23 May 2017;
(b) the rejection of Mr Chang’s Revised Statement resulted in the formal commencement of bankruptcy proceeding against Mr Chang;
(c) Mr Abate was appointed as the liquidator of Mr Chang’s bankruptcy;
(d) Mr Abate is awaiting a copy of the order appointing him as the liquidator of Mr Chang’s bankrupt estate which, once received, will need to be translated into English;
(e) the current order appointing Mr Abate as the liquidator of Mr Chang’s bankrupt estate only permits Mr Abate to act within Chile; and
(f) Mr Abate intends to apply for a further order from the Chilean Superintendency of Insolvencies permitting him to act outside of Chile as Mr Chang’s liquidator in bankruptcy.
Other legal proceedings involving the company
38 In his affidavit, the plaintiff stated that:
(1) Mr Chang has been charged in Chile for fraud, money laundering and violations of the Chilean General Banking Law No. 39 in relation to the investments made in the company;
(2) proceedings have been commenced by the United States’ Securities and Exchange Commission against Mr Chang and Onix Capital LLC (a United States company related to Mr Chang) in the United States of America, in which the Commission alleges that the defendants violated various antifraud provisions of the United States securities laws;
(3) Mr Chang fled to Malta in 2016, and the Prosecutor’s Office in Chile commenced extradition proceedings against Mr Chang in Malta but was unsuccessful; and
(4) the plaintiff has filed two petitions for the appointment of joint liquidators over two companies in the British Territory of the Virgin Islands that are related to Mr Chang and the company.
39 In his second affidavit, Mr Mitchell gave evidence that joint liquidators were appointed to 14 companies associated with Mr Chang and registered in the British Territory of the Virgin Islands, with most of the appointments taking place by order of the Eastern Carribean Supreme Court in the High Court of Justice, Territory of the Virgin Islands or by resolutions of shareholders of the relevant companies between 1 May 2017 and 18 May 2017.
APPLICATION OF MODEL LAW IN THIS CASE
Status-based criteria
40 These criteria are the conditions precedent specified by Art 17(1) of the Model Law, namely:
(1) the Chilean proceeding is a “foreign proceeding” within the meaning of Art 2(a);
(2) the applicant is a “foreign representative” within the meaning of Art 2(d); and
(3) the application has been submitted to the court referred to in Art 4.
41 As to (3), the application has been submitted to the court referred to in Art 4, being the Federal Court of Australia.
Is the Chilean proceeding a foreign proceeding?
42 The plaintiff’s evidence is that, under the Chilean Insolvency Law, the liquidation of a company is a court-controlled process whereby the debtor company’s assets are collected and realised by a liquidador before being distributed amongst its unsecured and non-preferential creditors. Creditors, both from Chile and abroad, rank equally amongst themselves on a pari passu basis.
43 Under the Chilean Insolvency Law, a court liquidation begins when a creditor files a petition seeking the appointment of a liquidador. The liquidador must be a person who appears on Chile’s Trustee List of approved liquidators produced by the Superintendente.
44 lf the petition is successful, a liquidador is appointed by the court initially as liquidador provisional for a period of between 30 and 40 days, after which his or her appointment must be ratified by a majority of the creditors at a meeting held within the framework of a court hearing and officiated by the judge.
45 The evidence does not include documents of the kind specified in Art 15(2)(a) and (b). However, there is a document which the plaintiff describes as a copy of orders made by a judge of the Chilean Court on 4 May 2016 and a certified translation of that document from Spanish into English. On its face, the document as translated meets the plaintiff’s description. In particular, the English translation provides that the “forced liquidation is hereby ordered” of the company, designates the plaintiff as liquidator in a provisional capacity and orders that the provisional liquidator “shall seize all the assets of the debtor company, its balance sheets and documents after making an inventory, including with the help of law enforcement, by producing an authorised copy of this Liquidation Ruling”.
46 There is also a document which the plaintiff describes as a copy of the minutes of the ratification hearing held on 29 June 2016 in accordance with the Chilean Insolvency Law and presided over by her Honour Ms Daniela Royer Faundez. Again, the document is accompanied by certified translation of the document from Spanish into English. On its face, the document as translated meets the plaintiff’s description. The English translation is entitled “Record of Law 20.720 hearing Creditor’s Meeting Liquidation of Data Company”. The record indicates that a board of creditors ratified the appointment of the plaintiff as liquidator “to hold that capacity definitively for all legal effects”.
47 I am satisfied that this evidence is acceptable evidence of the existence of the foreign proceeding and of the appointment of the foreign representative within the meaning of Art 15(2)(c).
48 Based on this evidence, and in light of the presumption stated in Art 16(2), I was satisfied that the Chilean proceeding is a collective judicial or administrative proceeding in a foreign State, being Chile, pursuant to a law relating to insolvency, being the Chilean Insolvency Law, in which proceeding the assets and affairs of the company are subject to control or supervision by a foreign court, being the Chilean Court, for the purpose of liquidation. Accordingly, I was satisfied that the Chilean proceeding is a foreign proceeding within the meaning of Art 2(a).
Is the plaintiff a foreign representative?
49 The plaintiff’s evidence is that he is authorised by the Superintendente to seek recognition and assistance as liquidator of the company in foreign jurisdictions including Australia. That evidence is supported by a document described by the plaintiff as a copy of the order of the Superintendente made on 25 July 2016. The document is accompanied by certified translation of the document from Spanish into English. On its face, the document as translated meets the plaintiff’s description.
50 The English translation of the document states that the authorisation has a maximum duration of 6 months. The plaintiff’s evidence is that the original authorisation was extended for an additional six months on 24 January 2017 and includes a Spanish document purporting to evidence that fact.
51 Based on this evidence and the evidence of the 4 May 2016 orders and the 29 June 2009 ratification hearing, and relying on the presumption stated in Art 16(2), I was satisfied that the plaintiff is authorised in the Chilean proceeding to administer the liquidation of the company’s assets and to act as a representative of the Chilean proceeding. Accordingly, I am satisfied that the applicant is a “foreign representative” within the meaning of Art 2(d).
52 The procedural conditions precedent are set out in Art 15(3), Art 17(1)(c) of the Model Law, s 13 of the Act and r 15A.3 of the Corporations Rules.
Article 15(3)
53 Article 15(3) requires an application for recognition to be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.
54 The plaintiff’s affidavit, filed with the originating process, identifies the proceeding in the United Kingdom referred to in [7] above and the proceeding in the United States referred to in [8] above. It also sets out the various proceedings and charges brought against Mr Chang and companies related to him set out in [38] above.
55 The affidavit states that the plaintiff is not aware of any other current foreign proceedings in relation to the company besides the proceedings set out above.
56 I consider that Art 15(3) was satisfied by the statements in the plaintiff’s affidavit.
Article 17(1)(c)
57 Article 17(1)(c) requires the application to meet the requirements of Art 15(2). The Art 15(2) requirements are set out at [15] above.
58 As noted above, I am satisfied that there is evidence acceptable to the Court of the existence of the foreign proceeding and of the appointment of the foreign representative within the meaning of Art 15(2)(c).
Section 13 of the Act
59 Section 13 of the Act requires that the application must be accompanied by a statement identifying, relevantly:
(a) any appointment of a receiver (within the meaning of s 416 of the Corporations Act 2001 (Cth)), or a controller or a managing controller (both within the meaning of s 9 of the Corporations Act ), in relation to the property of the debtor; and
(b) all proceedings under Chapter 5 or s 601CL of the Corporations Act or Schedule 2 of the Corporations Act in respect of the debtor;
that are known to the foreign representative.
60 The plaintiff’s affidavit deposes to the fact that he is not aware of any proceedings of the kinds specified in s 13(a) or (b), or any proceedings under Chapter 5 or s 601CL of the Corporations Act. The affidavit does not address proceedings under Schedule 2, which is the Insolvency Practice Schedule, inserted by the Insolvency Law Reform Act 2016 (Cth). However, the amendment of the relevant provisions in Chapter 5 and the commencement of the relevant provisions of Schedule 2 were deferred until 1 September 2017 by regs 10.25.01 and 10.25.02(3) of the Corporations Regulations 2001 (Cth), which were in turn inserted by the Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016 (Cth). Accordingly, there can be no proceedings under that Schedule In these circumstances, I was satisfied that the requirements of s 13 were satisfied.
Rule 15A.3 of the Corporations Rules
61 Rule 15A.3(1) provides that an application by a foreign representative for recognition of a foreign proceeding under Art 15 of the Model Law must be made by filing an originating process in accordance with Form 2. The application in this case complies with this rule.
62 Rule 15A.3(2) provides that the originating process must satisfy the following three requirements:
(1) it must be accompanied by the statements referred to in Art 15 of the Model Law and in s 13 of the Act;
(2) it must name the foreign representative as the plaintiff and the debtor as the defendant; and
(3) it must be accompanied by an affidavit verifying the matters mentioned in paras 2 and 3 of Art 15 of the Model Law and in s 13 of the Act.
63 As set out above, the originating application was accompanied by the statements referred to in Art 15 and s 13, which were contained in the plaintiff’s affidavit; it names the foreign representative as the plaintiff and the company as the defendant; and it is accompanied by an affidavit verifying the matters mentioned in s 13.
64 Accordingly, I am satisfied that the plaintiff’s application for recognition has complied with r 15A.3(2).
Dispensation with requirements in rr 15A.3(3) and (4)
65 Counsel for the plaintiff, Mr Sulan, acknowledged that the plaintiff has not complied with rr 15A.3(3) and (4) but submitted that the Court should dispense with compliance with these rules. Mr Sulan noted that there would be no utility in serving the originating process on the company (cf. r 2.7), where the plaintiff is its liquidator.
66 On 9 June 2017, I made an order dispensing with requirement to serve the originating process on the company and made orders pursuant to rr 15A.(3) and (4), 15A.6 and 15A.8(1) and (2) for service of the originating process and affidavits filed in support of the originating process.
67 Subsequently, the plaintiff provided those documents to the Superintendente and representatives of Mr Chang in accordance with those orders. Also pursuant to those orders, creditors were notified of the application to this Court by a publication in the Boletin Concursal, a Chilean publication of bankruptcy-related notices, in both English and Spanish.
68 There is no other person whom I considered ought to be served with the originating process. I was satisfied that no other steps should be taken prior to considering whether to recognise the Chilean proceeding as a foreign proceeding and a foreign main proceeding.
Recognition of the Chilean proceeding as a foreign proceeding and a foreign main proceeding
69 There is nothing to suggest that Art 6 applies to this case. Accordingly, the requirements of Art 17(1) having been satisfied, the Court was required to recognise the Chilean proceeding as a foreign proceeding.
70 By Art 17(2), the proceeding must be recognised as a foreign main proceeding if it is taking place in the State where the debtor had the centre of its main interests.
71 In Re Edelsten at [39], Beach J recognised that the question is where the debtor has the centre of his main interests as at the time of the Court’s decision.
72 In this case, based on the evidence set out above concerning the company’s domicile and the activities of the company in Chile, I accepted that the company had the centre of its main interests in Chile. Accordingly, the Court was required to recognise the Chilean proceeding as a foreign main proceeding.
Dispensation with requirement for notification of recognition orders: r 15A.7
73 The plaintiff sought dispensation from the requirements of r 15A.7, which provides for notification of an order for recognition of a foreign proceeding. I was satisfied that the orders proposed for the notification of creditors, the Superintendente and Mr Chang of the order for recognition were more appropriate in the circumstances of this case, and accordingly I dispensed with the requirements of r 15A.7. In particular, in the absence of any known creditors, I accepted that it was appropriate to dispense with the usual requirement to publish a notice of the making of the order in an Australian newspaper.
Article 21 relief
(1) an order pursuant to Art 21(1)(d) for the production to the Court of information concerning the company’s assets by the proper officers of Australian and New Zealand Banking Group Limited (“ANZ Bank”), Onix Capital Pty Ltd, Future Solar Technologies Pty Ltd and the managing partner of Donohoes Commercial Lawyers; and
(2) an order, pursuant to Art 21(1)(g), subject to the provisions of the Corporations Act, that all powers normally available to a liquidator appointed under the provisions of that Act be made available to the plaintiff.
Dispensation with requirements of r 15A.8
75 Rule 15A.8 is set out at [25] above.
76 The plaintiff sought the art 21 relief in the originating process. Sufficient notice of the relief sought was given to the affected parties by service of the originating process and by notification of the application in the Boletin, described above. As Mr Sulan observed, the steps currently proposed to be taken by the liquidator are in the nature of information gathering only.
77 Accordingly, I was satisfied that, to the extent necessary, the requirements of r 15A.8 should be dispensed with.
Consideration
78 Relief may be granted under Art 21 “where necessary to protect the assets of the debtor or the interests of the creditors”. The word “necessary” in this context does not have the meaning of “essential”; rather it is to be “subjected to the touchstone of reasonableness”: cf. Pelechowski v Registrar, Court of Appeal [1999] HCA 19; 198 CLR 435 at [51]. Article 21(1)(d) explicitly contemplates the granting of relief requiring the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities.
79 In Crumpler (as liq and joint rep) of Global Tradewaves Ltd (a company registered in the British Virgin Islands) v Global Tradewaves (in liq), re Global Tradewaves Ltd (in liq) [2015] FCA 1127; (2013) 246 FCR 138, the Court made orders for the issue of a summons for the examination of a person concerning the relevant company’s affairs pursuant to Art 21(1)(d).
80 There is evidence that Mr Chang is the registered proprietor of a property in Sydney and he has identified six bank accounts as his assets. The bank accounts are held with the ANZ Bank either in Mr Chang’s own name or in the names of Onix Capital Pty Ltd or Future Solar Technologies Pty Ltd.
81 There is evidence that Mr Chang has caused the company’s assets to be distributed to Mr. Chang for his personal use or for the use of companies under his control. There is evidence that the Sydney property was purchased with funds that were transferred by Mr Chang to Donohoes Commercial Lawyers. Accordingly, I accept that each of ANZ Bank, Future Solar Technologies Pty Ltd, Onix Capital Pty Ltd and Donohoes Commercial Lawyers may have information concerning the company’s assets, affairs, rights obligations and liabilities.
82 I accept the plaintiff’s submission that orders for production to those four entities will assist the plaintiff to investigate the affairs of the company and to the extent possible assist him to trace funds owned by the company and its creditors that may have been transferred to Mr Chang and brought to Australia. Accordingly, I accepted that the proposed orders for production are necessary to protect the assets of the company or the interests of its creditors. I was also satisfied that it was appropriate make an order, pursuant to Art 21(1)(g), subject to the provisions of the Corporations Act, that all powers normally available to a liquidator appointed under the provisions of that Act be made available to the plaintiff.
Dispensation with requirement for notification of Art 21 relief orders under r 15A.7
83 For the reasons given in relation to the notification of the order for recognition, I also dispensed with the requirements for notification of the Art 21 relief.
I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. |
Associate:
