Baliga v. Link Motion Inc.

Background

Defendant Vincent Wenyong Shi moved for a preliminary injunction, an order temporarily stopping an action while a case proceeds. He sought to prevent court-appointed receiver Robert Seiden from convening extraordinary general meetings of Link Motion, Inc. shareholders. The meetings concerned resolutions to appoint and remove certain Link Motion directors, including Shi.

The Cayman Court had authorized the receiver to call the meetings. The receiver later informed the court that Lilin “Francis” Guo, a major Link Motion shareholder who had requested the meetings, had disappeared and had been unreachable since April 2022. After adopting Magistrate Judge Debra Freeman’s report and recommendation, the court requested briefing on whether Guo’s disappearance affected the receiver’s authority and whether the receiver’s position that the meetings should wait until Guo could attend made Shi’s motion moot.

Shi argued that the receiver’s authority had expired under Link Motion’s bylaws and that the receiver’s authority had been limited to preparing an accounting. The receiver argued that the time limit in the bylaws did not apply and stated that the meetings should not proceed until Guo could attend. Baliga agreed with the receiver that Guo’s disappearance did not affect the receiver’s authority but argued that the meetings should proceed. Baliga also asked the court to authorize action allowing U.S. investors to convert their American Depository Receipts before the meetings; the court rejected that request again.

Court’s Analysis

The court found that the receiver had authority to convene the meetings. The court’s original receiver order gave him broad authority to protect Link Motion’s status quo, including removing directors when he considered it necessary or advisable. The Cayman Court later expressly authorized him to call meetings at which shareholders could vote on appointing or removing directors.

The court rejected Shi’s argument that the receiver’s authority had expired under the bylaws. The bylaws provided separate methods for calling a meeting: directors could call one on their own, while a meeting requested by members was subject to specified timing requirements. The court concluded that those timing requirements applied to a member-requested meeting, not to a meeting called by a director. Because the receiver had stated that Guo was unable to make a member requisition, the court treated the planned meetings as more like meetings called by a director. The three-month time limit therefore did not apply.

The court also concluded that neither the bylaws nor the Cayman Court’s order required Guo to attend. The court found that the meetings could proceed without him. It further held that adopting the report and recommendation did not cancel the receiver’s authority to convene the meetings because the receiver’s efforts were already underway before the recommendation was issued, and the court’s order did not require him to undo actions already taken. The court stated that the receiver retained this authority until being discharged after providing a full and final accounting.

Disposition

The court did not decide the four usual preliminary-injunction factors because it found Shi’s motion moot. The receiver had affirmed that he would not convene the meetings until Guo could be located, and the court independently ordered that the meetings be postponed until Guo could attend, provided that he reappeared before the receiver’s full discharge. The court therefore DENIED AS MOOT Shi’s motion to enjoin the receiver from convening the meetings.

Judge Victor Marrero also ordered the parties and the receiver to file separate letters within seven days addressing whether a Link Motion board meeting in early September 2022 violated any court orders and the extent of the court’s jurisdiction to address alleged violations and the board’s ability to meet.