From the Supreme Court of Mauritius
The appeal was preferred by Leedon Limited claiming a right of first offer conferred on it by Clause 12 of a Share Holder Agreement(SHA). There was an unsuccessful joint venture between two companies incorporated in Mauritius, JPMP MPL Holdings Ltd and Leedon Ltd. The corporate vehicle for the joint enterprise was MPL (I) Ltd (“MPL”), which had a wholly-owned subsidiary, Metalform International Limited (“MIL”), both incorporated in Mauritius. MPL was now in compulsory liquidation. The ownership, control and management of MPL was provided for by its constitution and by a shareholders’ agreement. JPMP held 51% of the issued capital of MPL whereas Leedon had the other 49%.
The financial position of the Metalform Group deteriorated sharply in 2005. There was a re-financing operation and an amended facilities agreement executed, but default continued and various notices of default and acceleration were issued. Receivers and managers were appointed by DBS (security agent for the syndicated loans) and finally DBS petitioned for MPL to be wound up.
The issues in dispute in the appeal arose in the liquidation of MPL. They were concerned with a right of first offer conferred on Leedon by Clause 12 of the SHA. The issue in the case was whether this right was, on the true construction of the SHA, exercisable at all once MPL was in compulsory liquidation.
The issue of disposal of the group assets came before the Bankruptcy Judge on a motion by the liquidators for an order authorising them to sell MPL’s shares in MIL by private treaty or tender where Leedon lodged a notice of objection claiming pre-emptive right over the assets of MPL. He then made an order giving the liquidators the authority and direction which they had asked for. Leedon appealed to the Supreme Court but the appeal was dismissed.
The Board agreed with the Respondents submission that clause 12 could not have been intended to have any effect after MPL had gone into liquidation, with the result that MPL ceased to be the beneficial owner of its assets, which instead became subject to a statutory trust. The clause was directed to the joint venture while it was proceeding and it was simply not directed to the possibility of a liquidation. It finally held that Clause 12 was not intended to apply in a liquidation and thus the appeal was dismissed.