RE LI CHEONG MAN

HCB 2870/2026

[2026] HKCFI 4783

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 2870 OF 2026

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REASONS FOR JUDGMENT

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1.  By petition presented on 27 April 2026 (“Petition”) the petitioner, Industrial and Commercial Bank of China (Asia) Limited (“Petitioner”), seeks an order for the administration of the estate (“Estate”) of the late Mr Li Cheong Man (“Debtor”) pursuant to s.112 of the Bankruptcy Ordinance (Cap. 6) (“BO”). At the second callover hearing, I made an administration order over the Estate. These are the reasons for my judgment.

2.  The Debtor’s widow, Madam Li Dandan (“Li”), filed a Notice of Opposition (“Notice of Opposition”) dated 3 June 2026 stating that she opposes the Petition on the following grounds:

(1)  The presentation of the Petition is irregular. Li has commenced HCCA 5656/2025 for administration of the Estate. The Petitioner should not be allowed to interfere with Li’s effort in seeking an order to administer the Estate while asserting in the Petition that there is no application for administration of the Estate (Procedural Ground);

(2)  The Petitioner failed to discharge the burden of proving that the Estate is insolvent as required by s.112(2) of the BO (Solvency Ground);

(3)  The petition debt includes default interest in the amount of HK$1,741,080. The Petitioner’s entitlement to default interest is in dispute as it was accrued owing to the Petitioner’s abusive act in registering caveats against the Estate which it is said have prevented proper administration of the Estate (Caveats Ground); and

(4)  Li has no income and depends on Comprehensive Social Security Assistance to raise her 3 children. If the court grants an administration order, substantial costs will have to be borne by the Estate which would be detrimental to the interests of her children (Costs Ground).

3.  In summary, Li contends that the court should leave her to apply for a grant over the Estate in HCCA 5656/2025; the administration order sought by the Petitioner, if granted, would deprive her lawful right to administer the Estate and would prejudice the interests of her children.

4.  Li filed an affirmation dated 28 May 2026 (“Li 1^st”) and a 2^nd affirmation dated 2 June 2026 (“Li 2^nd”) in support of the grounds raised in the Notice of Opposition. The Petitioner filed an affidavit of Cheng Veda dated 27 July 2026 in reply (“Cheng 1^st”).

A.  BACKGROUND

5.  The background facts are not in dispute or are indisputable.

6.  By application form dated 10 March 2020, the Debtor applied for a personal loan on the basis of, inter alia, the following terms and conditions (“T&C”):

(1)  If the Debtor defaults on any monthly instalment, an additional interest at 5% per month applies on the amount overdue from the due date until full repayment (cl. 6). The default interest rate was reduced to 3% per month from March 2021[1];

(2)  Upon the Debtor’s default, bankruptcy or death, the loan together with accrued interest and reasonable charges or fees shall become immediately due and payable (cl. 7);

(3)  A statement or demand issued by the Petitioner as to the amount due and owing to the Petitioner relating to the loan is conclusive and binding on the Debtor (cl. 8); and

(4)  The Debtor is liable to reimburse and indemnify the Petitioner against all reasonable costs and expenses incurred in connection with any enforcement action (cl. 12).

7.  By Letter of Approval dated 31 March 2020, the Petitioner offered to grant a HK$2 million loan to the Debtor (“Loan”) for 48 months, to be repaid by monthly instalments of HK$43,966.67 with monthly interest at 0.115% and subject to the T&C[2].  

8.  The Petitioner does not hold any security[3].

9.  The Debtor accepted the offer and the Loan was drawn down in full on 3 April 2020. The 1^st instalment was due on 3 May 2020. The Debtor repaid the 1^st to 15^th instalments up to 3 July 2021[4].

10.  On 21 July 2021, the Debtor passed away. No further repayment was made[5].

11.  By an Overdue Notice dated 17 August 2021, the Petitioner demanded the Debtor to repay the outstanding sum of HK$45,285.67, being the 16^th instalment and 3% overdue interest[6].

12.  By letter dated 18 August 2021, Li through her former solicitors informed the Petitioner that the Debtor had died intestate and sought information on his loan account. Further discussions took place between the Petitioner and Li but no agreement could be reached on repayment[7].

13.  Since September 2021, the Petitioner has followed its usual practice of registering a caveat (which is only valid for 6 months) against the Estate at the Probate Registry so as to bring the outstanding indebtedness to the attention of the personal representative or interested parties[8].

14.  On 3 April 2024, the 48-month loan period came to an end whereupon the Petitioner issued a Final Overdue Notice demanding payment of HK$2,190,859.11, being the outstanding principal plus interest and handling fees[9].

15.  On 25 August 2025, the Petitioner filed a caveat in HCCA 5656/2025 (“HCCA 5656 Caveat”). Subsequently:

(1)  On 13 February 2026, Li filed a Warning to Caveator to the HCCA 5656 Caveat[10].  

(2)  On 12 March 2026, the Petitioner filed an Appearance to Warning regarding the HCCA 5656 Caveat, stating that the Debtor had since 3 August 2021 failed to pay the amount due and as at 3 April 2024, the Debtor still owed the sum of HK$3,191,980.11 inclusive of interest and costs[11].

(3)  On 17 March 2026, Li took out a summons in HCCA 5656/2025 seeking an order (a) to strike out the HCCA 5656 Caveat and (b) to appoint her as administrator of the Estate on the ground that the Estate is insolvent.  At the hearing on 16 April 2026, the Petitioner through its solicitors indicated that it would present a petition seeking an administration order over the Estate[12].  

16.  On 23 February 2026, the Petitioner filed another caveat in HCCA 1250/2026. The Petitioner withdrew this caveat on 26 May 2026.  

17.  On 27 April 2026, the Petitioner presented the Petition to seek an administration order on the grounds that (a) the Debtor was indebted to the Petitioner in the amount of HK$3,191,980.11 (“Debt”); (b) the Petitioner does not hold any security in respect of the Debt; (c) the Estate is insufficient to pay the Debt; and (d) no probate or administration in respect of the Estate had been applied for.

18.  The Debt comprised:

(1)  Outstanding principal of HK$1,398,234.73;

(2)  Accrued interest of HK$52,665.38 (from 3 August 2021 to 3 April 2024); and

(3)  Default interest of HK$1,741,080.00 (from 3 August 2021 to 3 April).

19.  On 2 and 3 June 2026, Li filed Li 2^nd and Notice of Opposition respectively.

20.  After the Petition was served on the Official Administrator, by letter dated 8 May 2026, the Official Administrator informed the Petitioner’s solicitors that it had not received or taken possession of any part of the Estate, and it was not appropriate to do so because the Debtor died leaving next of kin, debts owed to other persons, there were caveats against the Estate and the Estate had been involved in legal proceedings[13].

21.  On 15 June 2026, the Petitioner filed a notice to withdraw the HCCA 5656 Caveat.

22.  On 23 June 2026, the Petitioner filed a consent summons for leave to withdraw the HCCA 5656 Caveat with no order as to costs, which was fixed to be heard on 30 July 2026 before a Master[14].

23.  The Petition was heard before a Master on 23 June 2026 and was adjourned to allow Li to seek legal advice. At the adjourned hearing on 30 June 2026, Li continued to oppose the Petition.  

24.  At the first callover hearing of the Petition before this Court on 13 July 2026, Li complained that it was abusive for the Petitioner to pursue the HCCA 5656 Caveat, thereby preventing the court from granting a letter of administration to Li, and seeking an administration order from the Bankruptcy Court. When this Court enquired why the HCCA 5656 Caveat could not be withdrawn, Mr Chris Fong, counsel for the Petitioner, stated that the HCCA 5656 Caveat could not be withdrawn without an order of the court[15]. The Petition was adjourned and leave was granted to the Petitioner to file an affirmation in reply to Li 1^st and Li 2^nd.

25.  On 30 July 2026, leave was given to the Petitioner to withdraw the HCA 5656 Caveat.  Accordingly, all caveats previously entered by the Petitioner against the Estate have expired or been withdrawn.

B.  DISCUSSION

B1.  Applicable principles

26.  This application is made pursuant to s.112 of the BO for administration in bankruptcy of estate of a person dying insolvent.

27.  Section 112(1) to (3) provides that:

“(1) Any creditor of a deceased debtor whose debt would have been sufficient to support a bankruptcy petition against the debtor, had he been alive, may present to the court a petition in the prescribed form praying for an order for the administration in bankruptcy of the estate of the deceased debtor, according to the law of bankruptcy.

(2) The petition shall be served on the legal personal representative of the deceased debtor or, if there is none in Hong Kong, on the Official Administrator, and the court may in the prescribed manner, upon proof of the petitioner’s debt, unless the court is satisfied that there is a reasonable probability that the estate will be sufficient for the payment of the debts owing by the deceased, make an order for the administration in bankruptcy of the deceased debtor’s estate or may upon cause shown dismiss the petition with or without costs.

(3)   A petition for administration in bankruptcy under this section shall not be presented to the court after proceedings have been commenced under the Rules of the High Court (Cap. 4 sub. leg. A) for the administration of the deceased debtor’s estate but the court may, when satisfied that the estate is insufficient to pay its debts, make an order for the administration in bankruptcy of the estate of the deceased debtor and the like consequences shall ensue as under an administration order made on the petition of a creditor.”

(underlined added)

28.  The purpose of the section is to bring about an administration that is fair to all persons interested in the due administration of an insolvent’s estate. The objective of the law is to make the bankruptcy law, subject to modifications, applicable to the estate of a deceased who is insolvent (Butterworths Hong Kong Bankruptcy Law Handbook, 8^th ed., §112.03).

29.  Section 112(2) provides that the court may make an administration order upon proof of the petitioner’s debt “unless the court is satisfied that there is a reasonable probability that the estate will be sufficient for the payment of the debts owing by the deceased”. In Re Fung Chi Fong [2011] 2 HKLRD 856, Anthony To J held that for the purpose of s.112(2):

(1)  A creditor only bears the burden of proving the debt. Once the debt is proved, the burden shifts to the opposing party to show that there is a reasonable probability that the estate will be sufficient to pay its debts (§37).

(2)  On the timing of insolvency of the estate, the court only has to consider the condition of the estate at the time of hearing the application, regardless of the condition of the deceased’s estate at the time of death (§33).

(3)  The test of reasonable probability of solvency of the estate should be based on balance sheet solvency. The court would consider whether there is any surplus in the estate and, if so, whether having regard to the nature of the assets, the likely costs of administration and management and all likely contingencies, there will be sufficient funds to repay the debts in full (§36).

30.  Section s.112(3) provides that a petition for  administration in bankruptcy under s.112 “shall not be presented to the court after proceedings have been commenced under the Rules of High Court (Cap. 4 sub. leg. A) for the administration of the deceased debtor’s estate”. However, the restriction under s.112(3) only applies to administration proceedings. The filing of a caveat, warning and appearance pursuant to the Non-Contentious Probate Rules (Cap. 10A) is not administration proceedings within the meaning of s.112(3) (Re Estate of Haque Shaquil [2012] 1 HKLRD 689, §44, per Poon J (as he then was)).

31.  More importantly, the restriction in s.112(3) does not affect the jurisdiction of the court to hear the petition or make an administration order, as the section goes on to say that “the court may, when satisfied that the estate is insufficient to pay its debts, make an order for the administration in bankruptcy of the estate of the deceased debtor”.

B2.  Debt proved

32.  The Petitioner has discharged the burden of proving that the Debt was due and remains unpaid for the following reasons:

(1)  The offer and the terms upon which the Loan was granted by the Petitioner to the Debtor, including its entitlement to charge interest and default interest, are evidenced by the Letter of Approval dated 31 March 2020. 

(2)  The Debtor had since August 2021 failed to repay the 16^th to 48^th instalments whereupon the Petitioner was entitled to charge default interest on the amount outstanding. No payment has been made by the Estate or Li.

(3)  The breakdown of the Debt, as pleaded in the Petition, shows the unpaid principal and interest accrued thereon from 3 August 2021 to the date of the Petition.

B3. Solvency of Estate & Solvency Ground

33.  The evidential burden is on Li to prove that the Estate is solvent. Not a single document has been adduced in Li 1^st and Li 2^nd to show that the Estate is solvent or that there are sufficient assets which can be applied towards repayment of the Debt.

34.  At the second callover hearing, Li tries to rely on her third affirmation dated 7 August 2026 (“Li 3^rd”), contrary to the direction given at the first callover hearing that no further affirmation could be filed without leave of the court. No explanation has been provided by Li as to why leave should be granted to allow her to file another affirmation. It seems to me that it is a deliberate tactic deployed by Li to engineer a further  adjournment of the Petition and I refuse to grant leave for her to file Li 3^rd.

35.  Regrettably, Li sees fit to raise her voice in court and acts in an extremely disrespectful and aggressive manner and insists that this Court must read Li 3^rd. Li also hands up what appears to be some annual reports of an insurance policy taken out in the name of the Debtor in support of her assertion that the Estate is solvent. Despite the repeated warnings given by this Court, including the possibility that she may be found to have been in contempt of court, Li continues to raise her voice and acts even more aggressively and impertinently.

36.  Having read Li 3^rd and the documents on de bene esse basis, I do not see that they support Li’s belated assertion that the Estate is solvent or that there are sufficient assets in the Estate to repay the Debt.

37.  The fact that the Estate is insolvent is reinforced by the following facts and matters:

(1)  In their letter dated 14 March 2025, the then solicitors for Li confirmed that the net value of the Estate did not exceed HK$500,000. The total value of the assets identified was HK$532,081.06, comprising (a) $72,130.96 in cash; (b) $433,284 in stocks; and (c) HK$26,666.10 in other assets.

(2)  According to the latest assessment made by the Petitioner’s solicitors, the total value of the Estate is HK$685,217.48, which comprises (a) HK$72,351.38 in cash; (b) HK$586,200 in stocks; and (c) HK$26,666.10 in other assets.

(3)  Even adopting the higher figure of HK$685,217.48, the assets in the Estate are plainly insufficient to repay the Debt which exceeds HK$3 million.

(4)  Despite the negotiations between Li and the Petitioner from August 2021, no agreement was reached for repayment of the amount owed to the Petitioner.

(5)  In her Notice of Opposition, Li admitted that the Estate is insolvent.

(6)  At the first and second callover hearings, Li repeatedly emphasised that she does not have the financial means to repay the Debt.  

38.  The Solvency Ground is wholly without merit.

B4.  Procedural Ground

39.  The Procedural Ground is misconceived. The caveat filed by the Petitioner is not an administration proceeding and the restriction under s.112(3) of the BO is not engaged.

40.  More importantly, for the reasons explained in §§30-31 above, s.112(3) of the BO does not take away the jurisdiction of the Bankruptcy Court in hearing the Petition and making an administration order if the Court is satisfied that the estate is insolvent. This is amply satisfied given that the Estate is insolvent, as I so find.

B5.  Caveats Ground & Costs Ground

41.  As stated in §32 above, the Petitioner has adduced documentary evidence to show the terms upon which the Loan had been advanced and its entitlement to charge default interest from the date of default. The breakdown of the Debt shows how interest is calculated. Li has not articulated, let alone demonstrated, in what way the calculation of interest is incorrect.

42.  In any event, the allegation that the Petitioner has taken steps to prevent proper administration of the Estate is not established. As a creditor of the Debtor, the Petitioner was entitled to register caveat against the Estate, which is a right conferred by rule 44 of the Non-Contentious Probate Rules.

43.  There is nothing improper for the Petitioner to register a caveat against the Estate, whether in HCCA 5656/2025 or in HCCA 1250/2026.

44.  While Li and the Petitioner did meet and discuss repayment of the Debt, no agreement could be reached. It seems to me that if Li was unable to persuade the Petitioner that the Estate had sufficient assets to repay the Debt or that she should be allowed to act as the administrator of the Estate, the only way the Estate can be administered would be for the court to make an administration order over the Estate. Once the order is made, the Estate can be vested in the Official Receiver as trustee thereof, and she can proceed to realize and distribute the Estate in accordance with the provisions of the BO (s.112(4) of the BO).

45.  The Costs Ground assumes that Li and her children are entitled to look to the Estate to provide for them. As the Estate is insolvent, it is by no means clear that Li and her children have such entitlement. Obviously, if and to the extent that Li decides to make a claim against the Estate, the Official Receiver will deal with the claim in accordance with the statutory scheme of bankruptcy. It is not a matter which militates against the court exercising its discretion to make an administration order over the Estate.

46.  For the reasons set out above, the Petitioner is entitled to seek an order for the administration of the bankruptcy of the Estate.