Jimmy Lai’s Next Digital Challenged in Hong Kong

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HONG KONG — Hong Kong media company Next Digital, which has been raising fierce criticism of the Chinese government for decades, said on Sunday it would take steps to shut down after an official crackdown left it no way to operate.

The company’s board of directors said in a statement that they resigned, calling for the liquidation of the company.

“We concluded that an orderly liquidation would best serve the interests of shareholders, creditors, employees and other stakeholders,” he said, adding that he hoped such a move would allow payment to creditors and former staff members.

The announcement was the latest in a series of coups. Hong Kong’s once free pressSuppressed by the national security law that the mainland Chinese government had imposed on the former British colony more than a year ago to quell dissent.

Founder and controlling shareholder of Next Digital, Jimmy Lai, in jail, charged with offenses involving violation of security law. In June, Hong Kong authorities froze some of the company’s bank accounts, forced to shut down flagship newspaper Apple Daily. At Next Digital, Mr. Lai, as well as several senior editors and executives, were charged with the crime.

Founded in 1995, the Apple Daily was the leading pro-democracy voice in Hong Kong media, frequently denouncing China’s ruling Communist Party and its allies in local government. His aggression soon made powerful enemies for Mr. Lai, who was forced to sell a clothing chain after the newspaper criticized a print Chinese leader.

According to China’s national security law wave of pro-democracy protests Defying his rule in Hong Kong in 2019, Mr. Lai and his media empire quickly became a target.

Next Digital said it would remain a solver if bank accounts weren’t frozen. Despite facing advertising boycotts led by supporters of the Chinese government, Apple Daily has been widely read and sold one million copies of the last edition. Shares of Next Digital, whose trading was suspended in June, rose at times last year as Hong Kong’s pro-democracy supporters bought shares to show support for the company.

Next Digital noted that it was forced to close before any of the lawsuits brought against its senior figures could be prosecuted. Its supporters argued that the actions taken against Next Digital and its publications not only undermine media freedom in the city, but also damage property rights and Hong Kong’s reputation as a good place to do business.

“When you abuse government power and freeze bank accounts and put people – the editor-in-chief, the chief executive, the founder – in jail, it smells like a banana republic,” said Mark Clifford, independent non-executive director of Next Digital. It’s not the image that makes Hong Kong an international investment hub or boasts of the rule of law and protection of property rights.”

Mr. Lai is expected to stand trial later this year on charges of fraud related to sub-lease of the company’s headquarters and on charges brought under national security law. These accusations allege collusion with foreign powers by funding a campaign that removed advertisements in publications including The New York Times calling for American sanctions against Hong Kong.

Mr. Lai founded the company that became Next Digital in 1990 with a single magazine. It eventually grew to include the Apple Daily, which introduced an edition in Taiwan. The board’s statement stated that executives are confident that Mr. Lai will join them to thank the company’s readers over the years.

Next Digital’s problems have only gotten worse in recent months. Hong Kong’s financial secretary, Paul Chan, has appointed an investigator to investigate the company’s financial affairs, a rarely exercised authority under local law. The Financial Reporting Council, Hong Kong’s audit watchdog, launched an investigation into the company in August. And audit firms have refused to work with Next Digital, raising doubts over whether it will be able to present financial statements at the end of September as required.

The company, whose accounts were frozen, was unable to pay the unpaid salaries of its approximately 700 editorial staff. Some found other jobs or started new media ventures covering topics such as online entertainment and horse racing, but many remained unemployed. Liquidating the company’s assets can help staff get some of the money they owe.

Hong Kong Journalists Association distributed cash coupons from Next Digital publications to ex-journalists. But the journalists were unable to receive government funds reserved for laid-off employees of bankrupt companies because Next Digital still has the money in the bank, even though it cannot access it.

The company closed the Taiwan edition of Apple Daily in May and is in talks to sell its remaining digital operations. Other assets, including Taiwan operations and the company’s archives, would most likely be sold when the company went into liquidation.

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