RE GRANDACCUM LTD

HCCW 694/2024

[2025] HKCFI 5482

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP)  PROCEEDINGS NO 694 OF 2024

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J U D G M E N T

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I. INTRODUCTION

1.  Before me is the Petition presented against the Company on 10 December 2024 in respect of a statutory demand served on 10 September 2024 (the “Statutory Demand”).  The underlying debt (the “Debt”)  of the Statutory Demand consists of outstanding sums totaling HK$294,931,461.95 under various loan agreements between the Petitioner as lender and the Company as borrower.

II.  PARTIES

2.  The Petitioner is a limited company incorporated in Hong Kong and was at the material times a registered money lender.  It is a wholly owned (indirectly)  subsidiary of Chong Sing Holdings Fintech Group Limited (“CS”), a Cayman company wound up in the Cayman Islands on 14 September 2020.  Mr Zhang Zhenxin (“Mr Zhang”)  was a major shareholder and a non-executive director of CS until his passing in September 2019.

3.  The Petitioner itself now is also in liquidation since 6 October 2020, and Madam So Kit Yee Anita and Madam Lau Wun Man (the “Liquidators”)  were appointed as its joint and several liquidators. 

4.  The Company is a limited company incorporated in Hong Kong.  At the material times, Mr Liu Puzhang (“Mr Liu”)  was its sole shareholder and director.

III.  THE 1^ST LOAN AGREEMENT

5.  On 2 December 2016, the Petitioner (via a director Mr Phang Yew Kiat (“Mr Phang”))  as lender and the Company (via Mr Liu)  as borrower entered into a loan agreement in respect of a term loan of HK$60,000,000 (the “1^st Loan”)  at an interest rate of 18% p.a. (the “1^st Loan Agreement”).  Clause 1.1 of the 1^st Loan Agreement provided that the repayment date was the date falling 12 months after the drawdown date, that is, 2 December 2017, subsequently extended by the Petitioner to 1 December 2019 upon the Company’s requests by letters dated 27 November 2017 (the “1^st Extension Application”)  and 30 November 2018 (the “2^nd Extension Application”).

6.  On 2 December 2016:-

(1)  By a share charge dated 2 December 2016 (the “1^st Share Charge”), to secure the 1^st Loan, the Company as chargor created a first fixed charge over 52,240,000 shares of CS (the “Charged Shares”)  in favour of the Petitioner as chargee.  The Charged Shares are now of no value upon CS’s liquidation.

(2)  The Company issued a notice of drawing (the “1^st Notice of Drawing”), signed by Mr Liu, to the Petitioner, stating that it intended to make a drawing and instructed the Petitioner to wire the amount of HK$53,400,000.

(3)  As a matter of fact, the Petitioner lent only HK$40,250,000 (the “1^st Loan Principal”)  to the Company, by way of transfer to the bank account maintained by the Company with HSBC (the “Company’s HSBC Account”).

IV.  THE 2^ND LOAN AGREEMENT

7.  On 14 February 2018, the Petitioner as lender and the Company (via Mr Liu)  as borrower entered into a second loan agreement in respect of a term loan of HK$130,000,000 (the “2^nd Loan”)  at an interest rate of 13% p.a. (the “2^nd Loan Agreement”), repayable on 14 February 2019. 

8.  For convenience, I shall refer to the 1^st and 2^nd Loans collectively as the “Loans”, and the 1^st and 2^nd Loan Agreement collectively as the “Loan Agreements”.

9.  On 14 February 2018:-

(1)  By a share charge dated 14 February 2018 (the “2^nd Share Charge”), to secure the 2^nd Loan, the Company as chargor created a charge over the Charged Shares in favour of the Petitioner as chargee.

(2)  The Company issued a notice of drawing (the “2^nd Notice of Drawing”), signed by Mr Liu, to the Petitioner, stating that it intended to make a drawing and instructed the Petitioner to wire the amount of HK$117,650,000 the bank account of one Intelligent Crew Ventures Limited (“ICVL”)  maintained with China CITIC Bank International Limited (the “ICVL’s CITIC Account”).

(3)  Accordingly, the Petitioner deposited the sum of HK$117,650,000 (the “2^nd Loan Principal”)  to the ICVL’s CITIC Account.

V.  THE COMPANY’S DEFAULT AND THE PETITIONER’S DEMANDS

10.  For the 1^st Loan, by 1 December 2019, the Company only made a partial repayment of HK$6,270,000.  For the 2^nd Loan, the Company has not made any repayment at all.  Despite the Petitioner’s repeated demands and the service of the Statutory Demand, the Company has not made any further payment at all. 

11.  On 10 December 2024, the Petitioner filed the Petition, and on 18 February 2025, the Company served a Notice of Intention to Appear.

VI.  THE COMPANY’S GROUND OF OPPOSITION

12.  The Company is absent from the hearing.  From the Affirmation of Wang Weizheng (“Mr Wang”)  (the current sole director and shareholder of the Company)  filed on behalf of the Company in the proceedings, confirmed by the Affirmation of Liu Puzhang, the following issues are identified as bona fide disputes on substantial grounds raised by the Company:-

(1)  The Loan Agreements are all shams;

(2)  The Company never received the Loans; and

(3)  The Company has never made any repayments.

13.  It is more convenient first to examine the second and third issues together.

VII.  NO LOANS RECEIVED AND NO REPAYMENTS MADE?

14.  There is no dispute that:-

(1)  For the 1^st Loan Agreement, the Company issued the 1^st Notice of Drawing and the Petitioner transferred the amount of the 1^st Loan Principal to the Company’s HSBC Account on 2 December 2016.  That amount is the same as the amount of the 1^st Loan Principal stated in the 1^st Loan Agreement.  It would be too coincidental if they were different funds.

(2)  For the 2^nd Loan Agreement, the Company issued the 2^nd Notice of Drawing and the Petitioner transferred the amount of the 2^nd Loan Principal to the ICVL’s CITIC Account.  That amount is the same as the amount of the 2^nd Loan Principal stated in the 2^nd Loan Agreement.  It would be too coincidental if they were different funds.

(3)  Insofar as the Company claims that the 1^st Loan Principal was subsequently transferred to a Baijin Limited, this of course does not mean that the 1^st Loan Principal received by the Company in the first place would become not a loan to the Company.

(4)  Insofar as the Company claims that the 2^nd Loan Principal was transferred to some third party, it must be noted that the 2^nd Notice of Drawing was issued by the Company and contained instructions that the loan should be transferred to the ICVL’s CITIC Account.  It was therefore still a sum advanced to the Company. 

15.  Further, according to the account ledgers of the Petitioner for loan receivables, the Company (through Swift Fortune Investments Limited)  made a payment in the sum of HK$6,270,000 (the “Partial Repayment”).  I see no reason to doubt the accuracy of the account ledgers, especially when this piece of evidence is against the Petitioner itself.

16.  Therefore, I find that the Company did receive the sums in the amounts of the 1^st Loan Principal and the 2^nd Loan Principal, and the Company did make the payment in the amount of the Partial Repayment.  There is no bona fide dispute on substantial grounds here.

17.  The question is what is the nature of these sums.  This brings me to whether the Loan Agreements are shams.  If they are not, then these sums were the Loans and the Partial Repayment.

VIII.  SHAMS?

18.  According to Mr Wang, whose affirmation filed on behalf of the Company is, as mentioned above, confirmed by Ms Liu’s Affirmation:-

  “11.3 In or around February or March 2014, there was a meal at a Chinese restaurant at Island Shagri-la in Admiralty attended by Mr Zhang, Mr Liu and Ms Liu Jiangyuan… (“Ms Liu”). As can be seen from copies of two online articles published in October 2019, Ms Liu was a close associate/assistant of Mr Zhang.

 11.4 During the meal, Mr Zhang requested Mr Liu to let him use the Company for carrying out a series of transactions with Mr Zhang’s group of companies for financing purposes. Having trust and confidence in Mr Zhang as a reputable businessman and a friend, Mr Liu believed that any intended intra-group transactions would be legitimate and therefore acceded to Mr Zhang’s request. Mr Zhang informed Mr Liu that Ms Liu… would be dealing with these transactions on his behalf.”

19.  In other words, the Company says that the Loan Agreements were shams.  I should also add that the transactions were regarded as intra-group transactions because according to Wang’s Affirmation, the Petitioner and the Company were both, directly or indirectly, controlled by Mr Zhang, but I do not think anything would turn upon that here.

20.  The legal principles in relation to determining whether a transaction is a sham are well-established:-

(1)  An allegation of sham is a serious allegation that requires cogent evidence to prove; and

(2)  Both parties should have the necessary subjective intention that the transaction is not what it purports to be.

See Hui Cheung Fai v Daiwa Development Limited, HCA 1734/2009, 8 April 2014)  at §§71-72 per DHCJ Eugene Fung SC (as he then was); and Vpower Group Holdings Limited v. CRRC Hong Kong Capital Management Co. Limited [2025] HKCFI 551 at§47 per DHCJ Kent Yee.

21.  For the following reasons, I am not satisfied that there is any bona fide dispute on substantial grounds that the Loan Agreements were shams.

22.  First, as found above, the Company did receive the sums of the 1^st Loan Principal and the 2^nd Loan Principal.  I see no good explanation for the Company’s receipts of these sums other than for the purpose of the Loan Agreements.

23.  Second, as found above, the Company did make payment to the Petitioner, and I see no good explanation for the payment other than for the purpose of making partial repayment as recorded by the Petitioner’s ledger.

24.  Third, as mentioned above, the Company did seek time extension by the 1^st and 2^nd Extension Applications.  I see no reason why the Company had to do that if it really thought that the Loan Agreements were shams.  This shows that even the Company did not have the subjective intention that the Loan Agreements were shams.

25.  Fourth, even assuming that the Company was indeed used by Mr Liu for legitimate purposes, this is not inconsistent with the Loan Agreements being genuine.  Mr Liu may really have used the Company to borrow loans from the Petitioner.   In this regard, I see no evidence to attempt to explain what purposes it was intended to serve by having the shams as alleged.

26.  In the circumstances, I am not satisfied that there is any bona fide dispute on substantial grounds that the Loan Agreements were shams.

IX.  CONCLUSION

27.  Having considered the above, I make a usual winding up order against the Company, with costs to the Petitioner, to be taxed if not agreed.  I thank Mr John Chan, counsel for the Petitioner, for his able assistance.