Ramsay-Hale J
220615 In the matter of Suning Sports Group Ltd – Judgment
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IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
FSD CAUSE NO: 107 OF 2022 (MRHJ)
IN THE MATTER OF THE COMPANIES ACT (2022 REVISION)
AND IN THE MATTER OF SUNING SPORTS GROUP LIMITED
Appearances:
Mr. Rupert Bell and Ms Harriet Ter-Berg of Walkers for the Petitioner
Before
Hon. Mrs Justice Ramsay-Hale
Heard
13 June 2022
Judgment Delivered:
15 June 2022
HEADNOTE
Companies - Winding Up - Section 92 (d) and 93(c) Companies Act
JUDGMENT
INTRODUCTION
1.
By Petition filed on 28 April 2022, the Petitioner, IMG Media Limited, sought an order to wind up
the Respondent, Suning Sports Group Limited (the “Company”), on the ground that the Company
is indebted to the Petitioner pursuant to two guarantee agreements entered into by the Company
in respect of the liability of two of its related companies in the wider Suning Group and is unable
to pay its debt.
BACKGROUND
1.
The following facts on which the Petitioner relies are set out in the supporting affidavit of Mr.
Duncan Fay, a director of the Petitioner.
2.
The Petitioner is part of the Endeavour Group, a global sports, events and talent management
Company. Part of the Petitioner's business involves the licensing of the rights to broadcast football
matches, including football matches in respect of Serie A (a professional league football
competition for football clubs located at the top of the Italian football league system) and the
Football Association Challenge Cup (the "FA Cup", an annual knockout football competition in
men's domestic English football).
220615 In the matter of Suning Sports Group Ltd – Judgment
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3.
The Company is an exempted limited company, incorporated in the Cayman Islands on 28
September 2017. Several companies within the Suning Group licensed the rights to broadcast
Serie A matches and FA Cup matches in mainland China from the Petitioner for a fee.
4.
On 17 September 2018, the Company and the Petitioner entered into a Company Guarantee
agreement (the "Serie A Guarantee”) pursuant to which the Company guaranteed performance
of certain obligations of PP Live Sports Italy Limited ("PPS Italy") under a Serie A Licence
Agreement between PPS Italy and the Petitioner dated 17 September 2018.
5.
Under Clause 1(a) of the Serie A Guarantee, the Company:
"…as a primary obligor, guarantees to the [Petitioner] full and punctual performance by [PPS
Italy] of all of its financial and other payment obligations under the [Serie A Licence] and
the full and immediate payment or discharge by it of all of its financial and other payment
obligations now or in future due, owing or incurred, or expressed or intended to be due,
owing or incurred, to the [Petitioner] by [PPS Italy] under the [Serie A Licence] (the
"Guaranteed Obligations")."
6.
Under Clause 1(b) of the Serie A Guarantee, the Company:
"…undertakes with the [Petitioner] that, if at any time and from time to time [PPS Italy] does
not pay to the [Petitioner] any amount falling within the ambit of the Guaranteed
Obligations, the [Company] will, within sixty days after the [Petitioner] issues a written
demand, pay the unpaid amount to the [Petitioner] without any need for the [Petitioner]
to obtain any court or similar order or judgment."
7.
On 17 May 2019, the Company and the Petitioner entered into an FA Cup Licence Agreement (the
"FA Cup Licence") with Great Mercury Limited ("GML") pursuant to which, inter alia, the Company
guaranteed certain obligations of GML to the Petitioner.
8.
Under Schedule 6, clause 1(a) of the FA Cup Licence, the Company:
"…guarantees to the [Petitioner] the full, due and punctual performance by [GML] of all of
its financial and other payment obligations under the [FA Cup Licence] and the full and
immediate payment or discharge by it of all of its financial and other payment obligations
now or in future due, owing or incurred, or expressed and intended to be due, owing or
incurred, to the [Petitioner] by [GML] under the [FA Cup Licence] (the "Guaranteed
Obligations").
9.
The first licence fee under the Serie A Licence fell due within 30 days of the entry into the
agreement, that is to say, by 17 October 2018. The second instalment fell due on 20 January 2019.
Subsequent instalments fell due every 6 months thereafter until 20 January 2021.
220615 In the matter of Suning Sports Group Ltd – Judgment
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10.
By November 2019, it appears that the Suning Group was experiencing financial difficulties. On 9
November 2019 the Petitioner, GML, PPS Italy and a related company, PPLive Sports International
Limited, entered into a Debt Assignment and Set-Off Deed (the "DASOD") pursuant to which, inter
alia:
a. PPS Italy assigned to GML the obligation to pay a portion of the amount outstanding to the
Petitioner under the Serie A Licence in the sum of EUR 1,317,998.77 (the "Serie A
Assignment"); and
b. the Petitioner assigned to GML its own obligation to pay the same sum of EUR 1,317,998.77
to a further entity, Inter Media and Communication S.P.A., under an agreement dated 20
September 2018 (the "Inter Media Assignment"). In consideration for the Inter Media
Assignment, the Petitioner agreed to set-off an amount equal to the value of the liability
under the Inter Media Assignment against GML's newly acquired liability under the Serie A
Assignment.
11.
The upshot was that the amount owed by PPS Italy under the Serie A Licence was reduced by the
sum of EUR 1,317,998.77.
12.
The first instalment fee of the licence fee under the FA Cup Licence fell due on 1 December 2019.
The second instalment fell due on 1 August 2020, with subsequent instalments falling due on the
first day of December and the first day of August every year until 1 December 2023.
13.
Despite multiple requests for payment by the Petitioner, both before and after the entry by the
parties into the DASOD, PPS Italy and GML repeatedly failed to discharge in full their liabilities
under the Serie A Licence and the FA Cup Licence respectively.
This Application
14.
On 15 January 2021, the Petitioner’s attorneys made written demand of the Company under the
guarantees for the monies due and owing by PPS to the Petitioner under the Serie A Licence and
due and owing by GML under the FA Cup Licence, seeking payment within 60 days and 30 days
respectively.
15.
On 17 January 2021, the Company wrote back acknowledging the debt due:
“ As at the date of this letter, PPS owes IMG amounts totaling EUR 6,300,251.23 under the
Series A license, with additional amounts totaling EUR 8,273,2000 due to become payable
on 20 January 2021…
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“As at the date of this letter, GML owes IMG amounts totaling US $5,000,000 under the FA
Cup Licence…”
16.
Some monies were subsequently paid on account of the FA Cup Licence. On 4 May 2021 a
Statutory Demand dated 22 April 2021 was served on the Company for payment of for the sum
of EUR 14,573,451.23 and USD 2,579,000.
17.
On or about 15 June 2021, a further sum of USD 500,000 was paid on account of the FA Cup
Licence, but the rest of the debt due to the Petitioner remained due and owing.
18.
On 18 January 2022, attorneys for the Petitioner wrote to the Company to advise that the
Petitioner would take immediate steps to present a winding up petition if the monies were not
paid in full by 31 January 2022.
19.
This Petition with supporting affidavits and exhibits was subsequently filed and served on the
Company. Notice of the Petition in the form prescribed in the Company Winding-Up Rules was
placed in newspapers here in the Cayman Islands where the Company is registered as well as the
PRC where the Company principally carries on its business. For completeness, the Petitioner also
placed advertisements of the Notice in Hong Kong: one in a newspaper published in Chinese and
one in an English periodical.
20.
The Company does not appear in opposition to the Petition.
Decision
21.
The Companies Act provides at section 92 (d) that a company may be would up if it is unable to
pay its debts. Section 93 (a) provides that a company shall be deemed to be unable to pay its
debts if it neglects to pay a statutory demand made by the Petitioner in a sum exceeding $100.
22.
Although winding up is a discretionary remedy where a debt is indisputably due, a petitioning
creditor is entitled to an order, ex debito justitiae, directing a winding up by the court. As the
House of Lords said in Bowes v. Directors of Hope Mutual Life Insurance and Guarantee Co. [1865]
11 HL Cas 389 (HL) where there is a valid debt, “ it is the duty of the court to direct the winding
up.”
23.
This principle has been consistently applied in this jurisdiction, most recently by the Chief Justice
in Re Sun Cheong Creative Development Holdings Limited 2020(2) CILR 942 who, at para 45,
described it as the “primary approach of the Courts" unless special reasons can be shown that the
relief should not be granted.
24.
The debt in this matter has been admitted, demand has been made and the debt remains
unsatisfied. The Company is unable to pay its debts as they fall due and the Court grants the
Petitioner’s application for a winding up order.
220615 In the matter of Suning Sports Group Ltd – Judgment
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Order
25.
Order made in terms of the Draft Order as amended.
DATED 13 June 2022
RAMSAY-HALE J