'Climate of fear': Jimmy Lai’s Hong Kong media group announces closure; files liquidation

In the aftermath of an official crackdown that has left staff with no means to operate, Jimmy Lai’s Hong Kong media company  Next Digital Ltd. announced on Sunday, Sep. 5, that it was closing down due to a ‘climate of fear'. In an official statement, the firm’s board of directors called for the liquidation. The firm that published Hong Kong's largest pro-democracy Apple Daily, has been known for vehement criticism of Xi Jinping’s communist regime. On Sunday, next Digital’s board of directors created a widespread stir with the announcement that they were quitting and liquidating assets in order to pay the salaries of the staff members and payments to creditors. 

The jailed dissenter of the Chinese government, tycoon Jimmy Lai was sentenced to 14 months imprisonment under the draconian National Security Law for unauthorized assembly in 2019. The Board of directors at Lai’s Next Digital Ltd. in a letter, lambasted the Hong Kong government for bypassing the courts and launching the controversial crackdowns enacting China-imposed national security law. The latter accused China of driving them out of business. 

“Hong Kong Secretary for Security cited the National Security Law to freeze company bank accounts, including those for Apple Daily newspaper in Hong Kong and its digital operations,” board of directors stated in the company’s filing. “The Secretary for Security further instructed that it would be a crime for the Company to use its funds in other accounts to pay any expenses on behalf of these operations.” 

Next Digital Chairman Ip Yut Kin and directors Mark Clifford, Louis Gordon Crovitz, and Lam Chung Yan turned in their resignations on Sunday, according to an exchange filing. They asserted that the company’s assets and bank accounts were frozen and its top reporters, and editors were detained, and others threatened. The company asked the government to allow the payment for the former staff. Due to the recent crackdown, it could no longer legally pay Apple Daily’s staff, including reporters, and has been banned from paying costs of doing business such as buying ink and keeping the electricity on. “We have concluded that the best interests of shareholders, creditors, employees, and other stakeholders will be served by an orderly liquidation, which we hope will result in liquidators being allowed by the Hong Kong government to authorize payments that directors were banned from approving, including for creditors and for former staff,” the company said. 

“The Hong Kong government has never indicated which articles published by Apple Daily allegedly violated the National Security Law,” the company’s filing on Sunday read. “This uncertainty created a climate of fear, resulting in many resignations among the remaining staff at the Company in Hong Kong, including those responsible for the regulatory compliance duties of a publicly traded company,’ it added.

No court order to freeze firm's assets 

Next Digital was also prohibited from using assets, despite the fact that there was no court order to freeze them, according to the resignation document. Apple Daily and its digital operations ceased publishing on 24 June 2021 after founder Jimmy Lai, and seven former Next Digital executives, editors, and editorial writers were arrested.  The company informed that several parties had expressed interest in acquiring the operations of Apple Daily in Taiwan. There is also value in assets such as the unique intellectual property created since Apple Daily was founded in 1995.