RE SHUN KAI BULLION CO. LTD.

HCCW 357/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO. 357 OF 2001

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J U D G M E N T

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1. This is a petition based on a judgment debt of $1 million; apparently part of that had been repaid in October 2000, but the balance remaining is still $0.5 million. The Company has said in its affidavit that its total liabilities amount to about $11.8 million of which there are some bank creditors and the rest are persons or companies related to those controlling the Company.

2. The Company has said in its affidavits that a scheme is being proposed. That scheme has been appended to an affidavit filed by Mr Wong Shun and the proposal is that the bank creditors would be repaid by very small monthly instalments for a period of more than 20 years. That in itself seems, as far as commercial reality is concerned, quite unlikely to be acceptable. Today, I have been told that the bank creditors have not provided any support for this scheme as proposed by the Company.

3. Further, it is quite clear from the affidavits that the Company really has no assets and that the only hope of the Company was that if certain directors were able to obtain damages in another action (in which the Company is not a party) and if those directors were able to get substantial damages, then they would make a gift of those damages to the Company. There of course is a considerable contingency in that the directors may not succeed in the litigation and even if they succeeded, they would not be under any liability to the Company to make a gift to it.

4. On the last occasion this matter came before this court on 3 July 2001, I adjourned it to today to await the response from the unrelated creditors to the Company's proposals. There is a letter from the Company's solicitors dated 6 July 2001 which says that notwithstanding the Company's effort to salvage itself from insolvency, it is unable to secure the commitment of its major creditors, namely the Wing Hang Bank Limited and HSBC, to the proposed scheme. Accordingly, I see no reason to exercise my discretion otherwise and I will make the usual winding up order.