Esprit Holdings (00330) announced that the Company's Board of Directors recently became aware that, at the request of the bankruptcy trustee of Esprit Europe B.V., a writ of summons filed with the District Court of Amsterdam, but without any supporting documents attached, has been served via email to the Company and Million Chance Resources Limited, an indirect wholly-owned subsidiary of the Company. According to the writ of summons, prior to the bankruptcy of Esprit Europe, Esprit Europe transferred its shares in Esprit (Holdings II) B.V., an indirect co-owner of certain intellectual property rights, to Million Chance Resources. The book value of these shares was €56.48 million, while the purchase price was €10.2 million. This purchase price was offset against a portion of a shareholder loan provided by the Company to Esprit Europe and assumed by Million Chance Resources. Additionally, Esprit Europe transferred multiple intra-group claims against non-European group companies, amounting to approximately €28.2 million, along with multiple debts to non-European group companies, amounting to approximately €11.3 million, to the Company. This was intended, among other things, to offset a shareholder loan of approximately €16.86 million provided by the Company to Esprit Europe. Following these offsets, an outstanding shareholder loan balance of over €49 million remained. The trustee alleges that these transactions prejudiced the interests of Esprit Europe's collective creditors. The trustee is demanding that the Company and Million Chance Resources compensate Esprit Europe's collective creditors for losses suffered as a result of these transactions and bear the related costs of these legal proceedings. The Company has sought legal advice regarding the basis of this legal proceeding and has been informed that the Kingdom of the Netherlands is a jurisdiction listed in Schedule 2 of the Foreign Judgments (Reciprocal Enforcement) Ordinance (Chapter 319 of the Laws of Hong Kong). Consequently, the enforcement of any Dutch judgment is subject to the provisions of this Ordinance. However, pursuant to Section 2(2) of the Ordinance, foreign judgments relating to the winding up of companies fall outside its scope of application. For the reasons stated above, the trustee's claim in the Netherlands concerning the wound-up Esprit Europe would not be enforceable in Hong Kong. Therefore, the claim is asserted without sufficient factual and legal basis. The Company will actively take appropriate measures, including legal action, to protect the Company's legitimate rights and interests and to safeguard the interests of the Group and the Company's shareholders. As the legal proceeding is still in its preliminary stages, the final outcome of the litigation and the potential financial impact of this proceeding on the Group, either currently or in the future, remains uncertain.
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