Martin Lee @ Sg
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Celestial Nutrifoods Money Go Round

The following account submitted by the provisional liquidator of Celestial Nutrifoods shows just how well (and fast) fraudsters can act to move money and assets out of legal shareholders’ reach before they can even blink their eye.

I bet whatever “nutrients” is left in the company would have already been sucked dry.

An expensive and painful lesson for all Celestial Nutrifoods shareholders.

The Provisional Liquidator of Celestial Nutrifoods Limited (In Provisional Liquidation) (the “Company”) wishes to announce that:

The Provisional Liquidator has taken steps to assert control over the Company’s subsidiaries in the British Virgin Islands (“BVI”) and the People’s Republic of China (“China”) and commence investigations into the affairs of the subsidiaries. The Company has three (3) immediate wholly owned subsidiaries in the BVI, namely Clear Faith Holdings Limited, Giant Fortune Group Limited and Max Dragon Investments Limited (collectively “the BVI Subsidiaries”).

Initially, the registered agent of the BVI Subsidiaries refused to recognise the appointment of the Provisional Liquidator pursuant to the Order of the High Court of the Republic of Singapore dated 24 December 2010 (“Appointment Order”) and refused to accede to the instructions of the Provisional Liquidator to register a change in the board of directors of the BVI Subsidiaries. In turn, this prevented the Provisional Liquidator from immediately taking action, through the BVI Subsidiaries, to gain control of the subsidiaries located in China.

In order to resolve the abovementioned situation, the Provisional Liquidator had no alternative but to seek recognition of the Appointment Order from the Supreme Court of Bermuda. The Supreme Court of Bermuda duly recognised the appointment of the Provisional Liquidator on 31 January 2011.

Having changed the composition of the boards of directors of the BVI Subsidiaries, the Provisional Liquidator sought to exercise the powers of the BVI Subsidiaries to change the board of directors and the legal representatives of their Chinese subsidiaries, Daqing Sun Moon Star Co., Ltd, Daqing Celestial Sun Moon Star Protein Co., Ltd and Daqing Weitian Energy Co., Ltd (collectively “the PRC Subsidiaries”). The Daqing branch of the Administration for Industry & Commerce (“AIC”) refused to register the proposed changes on the basis that the PRC Subsidiaries are no longer owned by the BVI Subsidiaries.

In this regard investigations since undertaken suggest that the following share transfers have been registered by the Daqing AIC:

  • shares representing 2% of the issued shares of each of the PRC Subsidiaries were transferred to Weihai Zhuozhan Import & Export Co. Ltd. (威海桌展进出口有限公司) on or around 11 August 2010;
  • shares representing 73% of the issued shares of each of the PRC Subsidiaries were transferred to Weihai Guosheng Real Property Development Co. Ltd. (威海国盛房地产开发有限责任公司) on or around 4 December 2010; and
  • shares representing 25% of the issued shares of each of the PRC Subsidiaries were transferred to Rui Feng Group Limited (锐丰集团有限公司) on or around 4 December 2010.

None of the abovementioned share transfers have previously been disclosed to the Singapore Exchange (“SGX”) by the Company’s directors. The Company’s Chairman has, upon enquiry by the Provisional Liquidator, since advised that the transfers occurring on or around 4 December 2010 arose as a result of China Construction Bank (the PRC Subsidiaries’ primary banker) exercising their collateral rights with respect to the shares in the PRC Subsidiaries upon becoming aware that the Company was to be delisted from the SGX.

In this regard, the Provisional Liquidator notes that the existence of share pledges over the shares in the PRC Subsidiaries was also not previously disclosed to the SGX, nor was any default under the loan facilities of China Construction Bank or the enforcement action taken by China Construction Bank.

The Provisional Liquidator is currently investigating the abovementioned share transfers. The Chairman of the Company has commenced communicating information to the Provisional Liquidator in relation to these transfers. The Provisional Liquidator will continue to investigate in this regard and take such action as he deems expedient.

The Provisional Liquidator’s investigations have also revealed significant transfers to external parties of the Company’s cash holdings in the year, and in particular in the six months preceding the appointment of the Provisional Liquidator, at a time when the Company, in the Provisional Liquidator’s view, appeared to be insolvent (given the indebtedness to bondholders which was immediately due and payable).

In this regard, approximately SGD16.7 million was paid to a company incorporated in the BVI who has not responded to the Provisional Liquidator’s correspondence but who, based on the advice of the Company’s Chairman, is a supplier to one of the Company’s PRC Subsidiaries. The Provisional Liquidator is currently inquiring into the above transfers.

At this point in time the Provisional Liquidator considers it extremely unlikely that any dividend will be paid to the Company’s shareholders.

Any queries in relation to this matter may be directed to either Mark Chadwick or Hubert Chang of this office (+65 6831 7820).

Yit Chee Wah
Provisional Liquidator
13 July 2011

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2 comments
Cheong says 7 years ago

From your gut feel, how much will shareholders get after the entire liquidation process ?

Reply
    Martin Lee says 7 years ago

    Cheong, if the company is insolvent, the shareholders will get back nothing. 🙁

    Reply
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