Cowan, in the matter of Coinful Capital Fund, SPC (in Official Liquidation) v Coinful Capital Fund, SPC

1. This evidence is sufficient proof of the existence of the foreign proceeding and the appointment of the foreign representatives for the purposes of Art 15(2)(c).
2. As to Art 4, as mentioned, by reason of s 10(b)(i) of the CBIA, this Court is competent to perform functions under the Model Law relating to a proceeding involving a corporate debtor.
3. I now turn to the status-based criteria.
4. I am satisfied that the CCF Proceeding and the CCMF Proceeding are each a "foreign proceeding" as defined in the Model Law.
5. The definition of "foreign proceeding" under Art 2(a) of the Model Law is extracted above. It was uncontroversial that both the CCF Proceeding and the CCMF Proceeding answered the description of being a judicial proceeding in a foreign state pursuant to a law relating to insolvency in which the assets and affairs of the companies were subject to the control or supervision of a foreign court for the purpose of reorganisation or liquidation. The only aspect of the definition of foreign proceeding that warranted closer scrutiny was whether in the context of the special rules in relation to the liquidation of SPCs, the foreign proceedings answered the description of being relevantly "collective". This issue was raised by counsel for the plaintiffs as a matter that called for careful consideration on the ex parte application.
6. The plaintiffs have properly flagged for my consideration whether the modification of the operation of s 140 of the Cayman Act in relation to the liquidation of a SPC takes the proceedings outside the notion of being a "collective judicial ... proceeding" as that phrase is used in Art 2(a) of the Model Law.
7. The plaintiffs also drew to my attention that so far as their research revealed, this issue has not been the subject of consideration in any judgments they have been able to obtain. They did locate orders made on 13 November 2015 in which the Court appears to recognise the winding up of a SPC registered in the Cayman Islands as "foreign proceedings" for the purpose of Art 2(a) of the Model Law but it appears that reasons for judgment were either not delivered in respect of those orders or have not been located. In a later decision in those same proceedings, a different judge made procedural orders, supported by brief ex tempore reasons, granting an application made by the foreign representatives for the issue of an examination summons and production order in furtherance of their investigations into the relevant SPC: Dickson, in the matter of Centaur Litigation SPC (in liq) v Centaur Litigation SPC (in liq) [2016] FCA 585 (Yates J). There was no necessity in that application for the Court to revisit or address the issue of whether the proceedings were relevantly foreign proceedings for the purpose of Art 2(a) as the order recognising the proceedings as such had already been made.
8. My own searches have been similarly barren. There is a fleeting comment by Palmer J in Everest Capital Ltd & Anor v HSBC Bank plc [2009] NSWSC 185 at [1]:

...The Second Plaintiff is said to be something called a "cell of a segregated portfolio company incorporated in the Cayman Islands". I have never encountered such a corporate entity, and its nature is unclear to me. ...

1. In Australian Securities and Investments Commission v Avestra Asset Management Limited (In Liquidation) [2017] FCA 497; 348 ALR 525, Beach J refers to a number of segregated portfolio investment funds operated in the Cayman Islands by Cayman Islands SPCs being relevant in those regulatory proceedings, but not in a way that is presently relevant.
2. Although it appears that the ground may be relatively untrodden, I am satisfied that the modified operation of s 140 of the Cayman Act in relation to the liquidation of a SPC does not take the two proceedings presently under consideration outside the notion of being a "collective judicial ... proceeding" as that phrase is used in Art 2(a) of the Model Law. The fact that the manner in which the pari passu principle is applied when dealing with the assets of the two SPCs the subject of these proceedings is subservient to the segregation principles embodied in s 219(6) and s 223 of the Cayman Act does not change that the liquidations are of each of the SPCs. The foreign proceedings the subject of this application are not concerned with the liquidation of the constituent segregated portfolios within the two SPCs. The Cayman Act does not appear to provide for the winding up of segregated portfolios - winding up is directed to the SPC itself, that is the corporate entity. That may be contrasted with the power to appoint receivers to the assets of an individual segregated portfolios under ss 224 and 225 of the Cayman Act. Although analogies are of limited use in contexts such as this, an analogy from an Australian perspective would be the power to appoint a receiver to trust property.
3. In each of the present foreign proceedings, the respective windings up affect creditors collectively because their debts are transformed into rights to participate in the distribution from the assets of the companies, albeit the manner in which the assets will be distributed will be informed by the statutory segregation applicable to SPCs and by the segregation principles which must be applied in accordance with s 223. The process is relevantly analogous in terms of its collective attribute to the more familiar liquidation scenarios described in Raithatha (liquidator) v Ariel Industries PLC (in creditors voluntary liquidation), in the matter of Ariel Industries PLC (in creditors voluntary liquidation) [2012] FCA 1526; 212 FCR 139 at [29] (Yates J) and Wong (Trustee), in the matter of Mackellar (Bankrupt) v Mackellar [2020] FCA 1151 at [33] (Derrington J).
4. For these reasons, I accept the plaintiffs' submission that the "modification" to s 140 of the Cayman Act required by Part 14 in the case of a segregated portfolio company does not take the proceedings outside the notion of being "collective" in the sense required by Art 2(a) of the Model Law.
5. It is not controversial that a voluntary winding up falls within the definition of Art 2(a) on the basis that it is an administrative proceeding for the purposes of liquidation and the liquidators conducting such windings up are subject to the control or supervision of the courts: Kellow (No 2) at [18]-[21], citing Judge Gross of the United States Bankruptcy Court in Delaware in Re ABC Learning Centres Limited (2010) 445 BR 381 at [7]. In the present circumstances, the supervisory order made in the CCMF Proceeding renders what was a voluntary process, now a winding up by in effect court order.
6. For the purposes of the evidentiary requirements pursuant to Art 15(3) and s 13 of the CBIA, Ms Cowan gave evidence that she is not aware of any further proceedings that have been brought against CCF or CCMF, including proceedings against the companies in Australia under the Bankruptcy Act 1966 (Cth) or the Corporations Act. Ms Cowan is similarly not aware of the appointment of any receiver (within the meaning of s 416 of the Corporations Act), or controller or managing controller (within the meaning of s 9 of the Corporations Act) in relation to the property of CCF or CCMF.
7. I now turn to the recognition of the plaintiffs as foreign representatives within the meaning of Art 2(d) of the Model Law. "Foreign representatives" is defined in Art 2(d) of the Model Law as "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". It is clear in this context that the plaintiffs, as liquidators of CCF and CCMF, are foreign representatives of each of the foreign proceedings.
8. For completeness, Art 6 provides that the court may refuse to take an action governed by the Model Law if the action would be manifestly contrary to public policy in Australia. Counsel properly raised the recent discussion of the public policy exception in PricewaterhouseCoopers Inc in its Capacity as Foreign Representative of IE CA 3 Holdings Ltd v IE CA Holdings Ltd [2024] FCA 1208 (Markovic J). Justice Markovic concluded that the intention to carry out further public examinations did not offend against public policy in the circumstances of that case which were quite different to the present circumstances. Justice Markovic observed at [131] that the Art 6 exception is to be "construed restrictively and only invoked in exceptional circumstances in relation to matters of fundamental importance for Australia". As mentioned at paragraph [59], the plaintiffs accept, as they must, that in order to exercise the power to conduct examinations, they will have to make an application to the Court for the issue of an examination summons. On the evidence before me, there is nothing to suggest that the public policy constraint is engaged.
9. Accordingly, I am satisfied that the plaintiffs are entitled to the relief they claim in relation to the recognition of the two foreign proceedings. I will now address the issue of whether that recognition should extend to recognition of the two proceedings as foreign main proceedings.

1. Article 2(b) of the Model Law defines "foreign main proceeding" as "a foreign proceeding taking place in the State where the debtor has the centre of its main interests".
2. Article 16(3) of the Model Law provides that in the absence of proof to the contrary, a company's registered office is presumed to be the centre of the debtor's main interest. This presumption may be rebutted if there are factors, objective and ascertainable by third parties (including creditors), warranting a conclusion that an "actual situation" exists which locates the centre of the debtor's main interests somewhere other than the place of its registered office: see Kapila, in the matter of Edelsten [2014] FCA 1112; 320 ALR 506 at 517 [54] (Beach J); Wood v Astra Resources Ltd (UK Company No 07620218) [2016] FCA 1192 at [14] (White J).
3. The presumption applies in respect of CCF and CCMF as their registered office is located in George Town, Cayman Islands.
4. The other matters relied on by the plaintiffs in support of a finding that each of CCF's and CCMF's centre of main interests was and remains the Cayman Islands are as follows:

(1) CCF and CCMF are incorporated under Cayman Islands law;

(2) The memorandum and articles of association of CCF indicate that the original registered office of CCF was an address in the Cayman Islands;

(3) the First Lazarus Agreement records the registered address of CCF as at 16 December 2019 as being in the Cayman Islands;

(4) the Second Lazarus Agreement records the registered address of both CCF and CCMF as at 1 March 2022 as being in the Cayman Islands;

(5) CCF's and CCMF's liquidations are being conducted solely by the Joint Official Liquidators who are employed by FFP Limited, a Cayman Islands registered company,

(6) Prior to the appointment of the liquidators CCF and CCMF were registered with and subject to the supervision and regulation of the CIMA;

(7) the CCF Proceeding and the CCMF Proceeding are subject to the supervision of the Grand Court of the Cayman Islands; and

(8) CCF's and CCMF's liquidations are subject to the supervision of the Grand Court of the Cayman Islands.

1. Such evidence as is available supports the presumption that each of CCF and CCMF have their centre of main interest in the Cayman Islands. In addition to the above indicia relied on by the plaintiffs, I would add that the restructuring of the arrangements into a master-feeder investment structure (as described in the liquidators' first report) was done on the basis that CCMF became the master fund and I would infer that as the master fund, CCMF was responsible for investments and trading activity. Accordingly, I am satisfied that it is appropriate to recognise each of the foreign proceedings as a foreign main proceeding.

Service and publication of order for recognition

1. Rule 15A.7 of the Rules provides requirements for service and publication in circumstances where the court makes an order for recognition.
2. The plaintiffs seek an order dispensing with the requirement for notice under r 15A.7 of the Rules for any orders made granting the relief sought in the originating process as well as in the interlocutory process: see Bankruptcy Office of the Canton of Geneva (Trustee) v Amoma SARL (In Liquidation), in the matter of Amoma SARL (No 2) [2023] FCA 1379 at [51] (McEvoy J) and Chong, in the matter of CNA Group Ltd v CNA Group Ltd [2015] FCA 1148 at [29] (McKerracher J).
3. Notwithstanding that notice of the hearing of the application was published in newspapers in Australia and the Cayman Islands and no interested party has sought to appear, I think it is appropriate to require compliance with rule 15A.7 in order that all interested parties may be informed of the outcome of the ex parte application. I will make orders accordingly.

1. As mentioned, the hearing before me was in respect of the originating process and the interlocutory application. It is not unusual to determine relief under Art 21 at the same time as the hearing of the recognition order: Kellow (No 2) at [42].
2. Article 21 of the Model Law provides:

1. 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:

(a) Staying the commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph 1(a) of article 20; > > (b) Staying execution against the debtor's assets to the extent it has not been stayed under paragraph 1(b) of article 20; > > (c) Suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent this right has not been suspended under paragraph 1(c) of article 20; > > (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; > > (e) Entrusting the administration or realization of all or part of the debtor's assets located in this State to the foreign representative or another person designated by the court; > > (f) Extending relief granted under paragraph 1 of article 19; > > (g) Granting any additional relief that may be available to [insert the title of a person or body administering a reorganization or liquidation under the law of the enacting State] under the laws of this State.

1. Upon recognition of a foreign proceeding, whether main or non - main, the court may, at the request of the foreign representative, entrust the distribution of all or part of the debtor's assets located in this State to the foreign representative or another person designated by the court, provided that the court is satisfied that the interests of creditors in this State are adequately protected. 2. In granting relief under the present article to a representative of a foreign non - main proceeding, the court must be satisfied that the relief relates to assets that, under the law of this State, should be administered in the foreign non - main proceeding or concerns information required in that proceeding.
2. The power to make orders under Art 21 is discretionary. The exercise of discretion ought be informed by the purpose of the Model Law as described in the preamble:

The purpose of the present Law is to provide effective mechanisms for dealing with cases of cross-border insolvency so as to promote the objectives of:

(a) Cooperation between the courts and other competent authorities of this State and foreign States involved in cases of cross-border insolvency;

(b) Greater legal certainty for trade and investment;

(c) Fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons, including the debtor;

(d) Protection and maximization of the value of the debtor's assets;

(e) Facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

1. In Abate, in his capacity as Liquidator of Onix Capital SA [2017] FCA 751, Gleeson J said at [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].

1. The relief sought by the plaintiffs in the interlocutory process may be divided into three main categories. First, orders which facilitate the investigations which the plaintiffs wish to advance in Australia. Secondly, orders which facilitate the plaintiffs to administer property and assets of CCF and CCMF in Australia. Thirdly, orders staying the commencement or continuation of proceedings concerning CCF's and CCMF's property rights, and any execution against CCF's and CCMF's property. I will address each category of order sought in turn.
2. It is in the interests of creditors for the plaintiffs to carry out the proposed investigations, which relevantly may include the examination of Mr Goward, Mr Klynhout and such other persons as the plaintiffs consider necessary and also taking delivery of documents relating to the affairs of CCF and CCMF.
3. As mentioned, Mr Goward and Mr Klynhout were directors of Lazarus, which collected over USD$7 million in management and performance fees for the management and reinvestment of the Coinful Group's assets. In circumstances where the substantial assets of the Coinful Group are almost entirely unaccounted for, the plaintiffs seek to use any information obtained from the examinations of Mr Goward and/or Mr Klynhout to consider whether CCF and/or CCMF may have claims against Lazarus and its directors, personally.
4. To the extent that the plaintiffs' investigations identify property and assets in Australia, the plaintiffs seek an order that the plaintiffs be entrusted with the administration and realisation of property and assets (and any proceeds thereof) of CCF or CCMF located in Australia, including the power to appoint a local representative including, without limitation, a liquidator, subject to such terms as the Court may impose.
5. I am satisfied that it is consistent with the overarching purpose in s 37M of the Federal Court of Australia Act 1976 (Cth), and with the purposes of the Model Law, as identified above, for that relief to be granted. Notwithstanding that the proposed powers may never fall to be exercised, it does not cause any prejudice to any party for the plaintiffs to be granted such powers at this stage and there is efficiency and economy in doing so.
6. Where, as here, a foreign proceeding is recognised as a "foreign main proceeding", it is not necessary to identify specific assets located in Australia to establish that relief under Art 21 is "necessary". It is enough that there are potential examinees in this jurisdiction: PricewaterhouseCoopers at [161]-[170] (Markovic J).
7. Section 16 of the CBIA provides that the scope and modification or termination of, relevantly, the stay referred to in Art 20(1) of the Model Law is the same as if the stay arose under Ch 5 of the Corporations Act (other than Pt 5.2 and Pt 5.4A). It is appropriate to make the orders sought in this respect by the plaintiffs.

1. For these reasons, I am satisfied that each of the CCF Proceeding and the CCMF Proceeding in the Grand Court of the Cayman Islands should be recognised, first, as a foreign proceeding for the purposes of Art 17(1) and, secondly, as a foreign main proceeding for the purposes of Art 17(2).
2. I will also make orders for the purposes of protecting the assets of CCF and CCMF within Australia under Art 21(1) in a form that is based on the short minutes provided by the plaintiffs and modified following the hearing. In their capacity as foreign representatives, the liquidators will have similar powers to those of a liquidator appointed under the Corporations Act.

I certify that the preceding one hundred and two (102) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

KIERAN CLARKE IN HIS CAPACITY AS OFFICIAL LIQUIDATOR OF COINFUL CAPITAL MASTER FUND, SPC (IN OFFICIAL LIQUIDATION)