HONG KONG — Next Digital, a Hong Kong media company that has published strong criticisms of the Chinese government for decades, said on Sunday it would take steps to shut down after an official crackdown prevented the company from operating.
In a statement, the company’s board of directors called for the company’s liquidation and said they had resigned.
“We have concluded that the interests of shareholders, creditors, employees and other stakeholders will be served by an orderly liquidation,” it said, adding that it hoped such a move would enable payments to creditors and former employees.
The announcement was the latest in a series of blows to Hong Kong’s once liberal press, which has been suppressed by the national security law the mainland Chinese government has imposed on the former British colony to quell dissent.
Next Digital founder and controlling shareholder Jimmy Lai is in prison and charged with crimes including violating security law. In June, Hong Kong officials froze some of the company’s bank accounts, forcing its flagship newspaper, Apple Daily, to close. Several top editors and executives at Next Digital, in addition to Mr. Lai, have been charged with crimes.
Founded in 1995, Apple Daily was the leading pro-democracy voice in Hong Kong’s media, often denouncing the Chinese ruling Communist Party and its allies in local government. His aggressiveness soon made powerful enemies for Mr. Lai, who was forced to sell a clothing chain after the newspaper criticized a Chinese leader in print.
Under the national security law imposed by China after a wave of pro-democracy protests in 2019 that challenged its rule in Hong Kong, Mr. Lai and his media empire soon become targets.
Next Digital said it would have remained solvent if its bank accounts had not been frozen. Though it faced advertising boycotts led by supporters of the Chinese government, Apple Daily was widely read and sold one million copies of the latest edition. Shares of Next Digital, which were delisted in June, had surged at times over the past year as pro-democracy supporters in Hong Kong bought shares to show support for the company.
Next Digital noted that it was forced to close before any of the cases against its senior figures went to trial. Her supporters have argued that the actions against Next Digital and its publications not only harm media freedom in the city, but also damage property rights and Hong Kong’s reputation as a good place to do business.
“If you abuse state power and freeze bank accounts and throw people in jail – the editor-in-chief, the director, the founder – it smells like a banana republic,” said Mark Clifford, an independent non-executive director of Next Digital. “This is not what made Hong Kong a center of international investment or the image it is proud of, with the rule of law and the protection of property rights.”
Mr. Lai is expected to be tried later this year on charges of fraud related to a sublease of the company’s headquarters, as well as charges under national security law. Those allegations allege that he colluded with foreign powers by funding a campaign that took out ads, in publications such as NewsMadura, calling for US sanctions against Hong Kong.
Mr. Lai founded the company that became Next Digital in 1990 with a single magazine. It grew into Apple Daily, which eventually introduced an edition in Taiwan. The statement of the board stated that the directors had confidence that Mr. Lai would join them to thank the company’s readers over the years.
Next Digital’s problems have worsened in recent months. Hong Kong’s financial secretary, Paul Chan, appointed an inspector to investigate the company’s financial affairs, a power rarely used under local law. The Financial Reporting Council, Hong Kong’s audit watchdog, opened an investigation into the company in August. And accountancy firms refuse to work with Next Digital, which makes them doubt whether they can submit the necessary financial statements by the end of September.
Due to the frozen accounts, the company has been unable to pay back wages to approximately 700 editorial staff. Some have found other jobs or started new media on topics such as online entertainment and horse racing, but many remain unemployed. A liquidation of the company’s assets could help the staff receive some of the money they owe.
The Hong Kong Journalists Association has distributed cash vouchers to former journalists from Next Digital publications. But the journalists have not been able to receive government money intended for laid-off employees of bankrupt companies, because Next Digital still has money in the bank, even if it cannot access it.
The company closed the Taiwanese print edition of Apple Daily in May and is in talks to sell its remaining digital business. Other assets, including the company’s Taiwan operations and archives, would most likely be sold once the company goes into liquidation.