Yongnan Kang has gone to ground, current whereabouts unknown, whilst both Jianping Yang, majority shareholder in bottled water exporter One Pure, and offshore company Guangzhou Dongjiang Petroleum lay claim to Mr Kang’s 25 per cent interest in One Pure in satisfaction of money owed.
Mr Yang is owed $22.3 million; damages for Mr Kang’s misrepresentations and misleading conduct on sale of a majority stake in One Pure. Guangzhou Petroleum is owed $1.7 million; the balance of a loan unpaid by Mr Kang.
Both have charging orders over Mr Kang’s minority interest, entitled to first dibs over proceeds of his stake in One Pure, when sold.
These charging orders have hampered company operations at One Pure. Mr Yang wants to take full control of One Pure. His own charging order blocks transfer to him of Mr Kang’s minority holding, a transfer otherwise permitted by their earlier signed shareholders’ agreement.
The Court of Appeal was told this problem has hindered company operations where signature of both shareholders is required; in particular, establishing new bank accounts and dealing with One Pure’s auditors.
Over Guangzhou Petroleum’s objections, the Court of Appeal removed Mr Yang’s current charging order. Guangzhou said the charging order should not be lifted until the value of Mr Kang’s minority interest in One Pure has been valued. It wants to clarify the economic value of its charging order.
No valuation is needed, the Court ruled. Mr Yang is entitled to assume control of One Pure’s total shareholding, with ‘payment’ for the minority interest purchased being set-off against the $22.3 million owed.
Guangzhou Petroleum is no more than an unsecured creditor with the right to prove in Mr Kang’s bankruptcy, should he be bankrupted, the Court said. The value of Mr Kang’s former minority interest in One Pure only becomes an issue on bankruptcy, with any adjustment between Mr Yang as a potentially part-paid unsecured creditor and Guangzhou as an unpaid unsecured creditor then relevant.
Wang v. Kang – Court of Appeal (2.07.24)
24.170