CL-2022-000069 - [2025] EWHC 1512 (Comm)

The Claimants contend that the Defendants breached the APA by failing to deliver the Withheld Assets at the Second Closing Date, although the Defendants eventually delivered the Critical Withheld Assets in February 2022 once the Claimants issued the current proceedings and applied for an injunction, in accordance with the undertakings which the Defendants gave to resolve the Claimants’ injunction application.

At the Second Closing Date (14th December 2021), in breach of the APA for which no justification has ever been advanced, the Defendants failed to deliver the Withheld Assets (including, in particular, the critical back-end IT Systems which control the EASI platform) they were contractually obliged to deliver (Mr McGlade’s first witness statement, para. 12). The Defendants had provided the Claimants with “user accounts” which enabled the Claimants to access the back-end management and finance systems of the EASI platform, together with joint access to the main operating bank accounts, which allowed some visibility over business data, and the ability to make limited operational changes. However, the Defendants did not transfer to the Claimants the IT Systems; the retention of those assets gave the Defendants complete control over the EASI platform. Until February 2022, the Defendants used that control in various ways which prejudiced the Claimants, including removing the Claimants’ access to the EASI platform entirely by disabling the user accounts previously provided (Mr Kelu Liu’s first witness statement, para. 28-30). The result of this was that the Claimants were unable to operate the EASI Business they had acquired (Mr Kelu Liu’s first witness statement, para. 30; Mr McGlade’s first witness statement, para. 12).

After the Defendants complied with the undertakings given by them as recorded in the order of Butcher, J dated 22nd February 2022, the Claimants were able to obtain control of the EASI Business from 26th February 2022, although they still had not received all of the Withheld Assets. The Claimants therefore did not have control of the EASI Business for over two months after the Second Closing Date. During that period, order volumes fell by more than 30% in respect of the EASI Business and 60% of employees left and contractors resigned (Mr Kelu Liu’s first witness statement, para. 8(b), 36).

At para. 37 of his first witness statement, Mr Kelu Liu said:

“I believe that both the fall in order volumes, and the departure of employees are at least partly the result of HungryPanda being unable to exercise any control over the IT Systems, as I have described. However, whether or not that is so – as a result of the Sellers’ continued withholding of the IT Systems necessary to control the Business, HungryPanda is unable to do anything to remedy the situation, or to preserve the Goodwill of the Business it has acquired, let alone transition it into the HungryPanda brand as intended.”

With the benefit of this evidence, I am satisfied that the Defendants failed to deliver the Withheld Assets to the Claimants by the Second Closing Date on 14th December 2021 in breach of their obligations under the APA.