Conyers' litigation and corporate teams were recently pleased to assist China Medonline Inc. (the "Company") in relation to the withdrawal of a winding-up petition against the Company in the Cayman Islands Grand Court, and in relation to the sale of the Company's material underlying assets and business. The sale was followed by a negotiated exit plan agreed amongst the Company and its shareholders, and stands as an example of the value of a unified legal strategy in complex cases such as these.
The Winding-Up Petition
CTS Hermitage Healthcare Fund (the "Petitioner"), a Cayman Islands-based entity, presented a winding-up petition against the Company, an online healthcare company owned by different multinational corporate shareholders and fund administrators holding different classes of shares. The Petitioner sought to wind up the Company under sections 92(d) and 93 of the Cayman Islands Companies Act (As revised), on the grounds that the Company was insolvent as it was unable to pay its debts.
The petition stemmed from alleged unpaid redemption debts owed to the Petitioner.
Initial Hearing and Adjournment
The winding-up petition was initially heard on 15 December 2023, before Justice Kawaley in the Cayman Islands Grand Court. Notably, the Company was not represented at this initial hearing. However, recognising the potential ramifications, other shareholders, including Trustbridge Partners V, L.P., Trustbridge Partners III, L.P. ("Trustbridge"), Baidu Holdings Limited ("Baidu"), and Tencent Mobility Limited ("Tencent"), appeared to oppose the petition. The Court adjourned the petition based on an application by Tencent, Trustbridge and Baidu.
A Strategic Legal Response
Further to the initial hearing, the Company engaged Conyers to oppose the winding-up petition. The Conyers litigation team developed a multi-pronged strategy specific to circumstances in which there were concerns that the application to wind up the Company would prejudice ongoing negotiations for the sale of the Company's underlying business.
Simultaneously, Conyers' corporate team advised the Company on potential acquisition opportunities, involving various stages, including the bidding acquisitions between two solid potential investors who offered to acquire the material underlying assets and business of the Company by way of transferring the shares in an indirect wholly-owned PRC subsidiary of the Company to the successful buyer. The transaction was conditional upon, among other things, the said petition being withdrawn from the Court, and obtaining all the consents and approvals required according to the constitutional documents of the Company.
Despite the complexity of the shareholding structure and the protective provisions as detailed in the articles of association of the Company, both Cayman legal requirements and the corporate governance provisions under the articles of association of the Company to address the various urgent requests from its shareholders of different share classes throughout the negotiation process were fulfilled.
Collaborative Effort Leads to Settlement
The collaborative nature of the advice to China Medonline Inc. allowed this transaction to progress in a way that addressed the concerns of the Petitioner while paving the way toward a mutually agreeable resolution. Also significant to the successful completion of the transaction, and the subsequent exit plan of the shareholders, was the Petitioner's agreement to withdraw the petition against the Company, and the Court's grant of leave for the resulting withdrawal application. This outcome demonstrates the effectiveness of a collaborative approach, with integrated legal strategies leading to a favourable resolution for the client facing multifaceted legal and business challenges.
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