RE CHIM CHOI PANG

HCB 9056/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 9056 OF 2010

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J U D G M E N T

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The Petition

1.  This is a debtor’s petition (“the Petition”) presented by Chim Choi Pang (詹彩憑) (“the Debtor”) on 30 December 2010 for her own bankruptcy.

2.  The Debtor has made a statement of affairs (“the Statement of Affairs”), verified by an affirmation, dated 30 December 2010.  In the Statement of Affairs (as amended on 31 January 2011), the Debtor disclosed that:-

(1)   She had no secured creditors.

(2)   She had a total of 19 unsecured creditors, and the total amount of her outstanding debts came to HK$1,547,340.

(3)   Her only asset was an interest in a property at Flat J, 27/F, Tower 5, Wing Fok Centre, 1 Luen Chit Street, Fanling, New Territories, Hong Kong (“the Fanling Property”) held in the joint names of the Debtor and her former husband, Chim Yuk Shing.  An estimated current value of the Fanling Property, namely, HK$800,000, was given.

(4)   She had an income, by way of salary, of HK$4,500 per month, and the total amount of her expenditures was HK$6,300 per month.

3.  In the Petition, the Debtor stated that she was unable to pay her debts.

Credit Gain Finance Company Limited’s opposition to the Petition

4.  One of the Debtor’s creditors is Credit Gain Finance Company Limited (“the Opposing Creditor”).

5.  The Debtor entered into a Loan Agreement with the Opposing Creditor dated 28 September 2010, under which the Opposing Creditor advanced, and the Debtor borrowed, a sum of HK$320,000, repayable by 48 equal monthly instalments of HK$10,827 each commencing on 1 November 2010 and thereafter on the first day of each and every calendar month until full repayment.  This loan was apparently obtained by the Debtor for the purpose of enabling her to repay other outstanding debts owed by her.

6.  As a matter of fact, the Debtor paid one instalment of HK$10,827 on 3 November 2010 and made a partial payment of HK$4,000 on 18 December 2010 to the Opposing Creditor, but has otherwise defaulted in her payment obligations under the Loan Agreement.

7.  A number of demand letters were issued by the Opposing Creditor to the Debtor dated 4, 11 and 16 December 2010 respectively, but the demands were not met by the Debtor, save and except the aforesaid partial payment made on 18 December 2010.  As earlier mentioned, the Debtor presented the Petition herein on 30 December 2010.

8.  Mr Jason Wong for the Opposing Creditor submits today that the court should not make the bankruptcy order sought because it is questionable whether the Debtor is truly unable to pay her debts.  A number of grounds are relied upon.

9.  First, Mr Wong says that it is not in dispute that the Debtor is a joint owner of the Fanling Property, and she has failed to produce evidence regarding the current market value of the property.  From the relevant land search, it can be seen that the Fanling Property was purchased in 1994 and the purchase price was HK$729,600.  It appears that the Fanling Property is not subject to any mortgage or charge.  I am told that the Fanling Property is currently occupied by the Debtor’s former husband and their 3 children.  As mentioned above, the Debtor has given an estimated current value of the Fanling Property, namely, HK$800,000, in the Statement of Affairs.  I do not know, however, the basis on which this estimate is arrived at, in particular, whether it is net of the premium payable to the Hong Kong Housing Authority (the Fanling Property being held under the Home Ownership Scheme). On the other hand, Mr Wong has informed me that his instructing solicitors have carried out an internet valuation of the property, and it is worth over HK$2m as at 20 April 2011.

10.  The Debtor says that the property was in fact paid for by her former husband and belongs to him, and she has not sought any relief in respect of the property in the matrimonial proceedings.

11.  On the face of the matter, the Fanling Property is held in the joint names of the Debtor and her former husband.  However, it cannot be turned into cash readily.  Even if the Opposing Creditor’s valuation of the property is accepted, the Debtor’s half share in the Fanling Property would not be sufficient to discharge all her existing debts, amounting to over HK$1.5 million.

12.  Second, Mr Wong says that the Debtor has failed to produce evidence regarding the other 18 creditors and the amounts of the debts owed by the Debtor to those other creditors.  There is however no evidence to contradict the details of the unsecured debts set out in List B of the Statement of Affairs, which has been verified by the Debtor on oath.

13.  Third, Mr Wong points out that the Debtor used to be the proprietor of a restaurant known as Wing Fuk Restaurant at Flat CF-3&4, 2^nd Floor, Luen Wo Hui Market, 9 Wo Mun Street, Fanling, New Territories, Hong Kong.  It is alleged by Lo Che Hung, the Head of the Credit Control Department of the Opposing Creditor, who filed an affirmation herein on 2 February 2011, that the Debtor transferred the business of the restaurant to a third party (Yau Shu Ping) on 11 November 2010, but she has failed to account for the sale proceeds.  The business registration search in respect of that restaurant suggests that Yau Shu Ping became the proprietor on 11 November 2010, shortly after the Debtor entered into the Loan Agreement with the Opposing Creditor.

14.  The Debtor’s evidence is that the business of the restaurant was loss making, and she had no alternative but to close the restaurant.  However, Yau Shu Ping (a former worker at the restaurant) was interested to carry on the business of the restaurant, and she allowed him to do so.  There was no sale of the business and she received no consideration from Yau Shu Ping.  The Debtor has also told me this morning that the restaurant has now been taken over by one Mr Man as from 31 March 2011, and the Debtor is currently working for Mr Man at the restaurant, and paid a salary of HK$4,500 per month.  Understandably, the Opposing Creditor has not adduced any evidence to contradict this version of events given by the Debtor.

15.  Lastly, Mr Wong refers to the evidence filed by the Opposing Creditor that, at the time of the Debtor’s application for the loan, she told the Opposing Creditor’s representative that she had a monthly income of HK$40,000 derived from the restaurant business.  This is denied by the Debtor.  Even if the Debtor had made such representation to the Opposing Creditor in order to induce it to grant the loan, it is not suggested that the Debtor presently still has a monthly income of HK$40,000 from which the outstanding debt owing to the Opposing Creditor can be discharged.

16.  There are other minor points mentioned by Mr Wong, but I do not find that those points, taken either alone or cumulatively, are sufficient to show that the Debtor is able to pay her debts.

17.  Overall, I am satisfied on the evidence before me that the Debtor is unable to pay her debts, and I make the usual bankruptcy order against the Debtor.

[Argument on costs]

18.  I make no order as to the costs of the Opposing Creditor.