RE SIU-FUNG CERAMICS HOLDINGS LTD.

HCCW 277/1999
HCCW 278/1999
HCCW 279/1999
HCCW 280/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP)

NO. 277 OF 1999
NO. 278 OF 1999
NO. 279 OF 1999
NO. 280 OF 1999

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D E C I S I O N

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1. There are altogether 4 Petitions for the winding-up of 4 companies. Although 4 companies are involved, it is common ground that they belong to the same group, which can for convenience be called the "Siu Fung" Group: see, for example, paragraphs 1 and 3 of the 2nd affirmation of Xiao Yi Li dated 8 May 2000.

2. The debts which brought about these Petitions were incurred since about 1996. The Petitions themselves were issued over a year ago in April 1999. The evidence discloses (as is indeed common ground between the parties) that the Petitions have been adjourned to await the outcome of a restructuring proposal made to the body of creditors earlier. By mid-April 2000, it became clear that such proposal was not accepted by all the creditors.

3. The Petitioner now asks for a winding-up order to be made against all 4 companies whereas the companies as well as Mr Lee Siu Fung, the Group's chairman and one of the creditors (by way of shareholder's loan) oppose the application and ask for the matter to be adjourned for another 28 days. Several grounds have been advanced on their behalf to oppose the Petitioners' application and to support the application for an adjournment.

4. First, 4 restructuring proposals are being put forward now. The Petitioner, together with Heng Sang Bank Limited and HSBC Private Equity, are creditors whose debts constitute about 60% of the total indebtedness of the Siu Fung Ceramics Holdings Limited. They are not agreeable to any of the 4 proposals. Mr Carolan for the companies does not dispute that without their agreement, any proposal which has to be implemented by way of a scheme of arrangement is unlikely to succeed. He contends, however, that a chance ought to be given to the other creditors to consider the new proposals and to express their view thereon. I notice that apart from Mr Lee, no other creditors have indicated that they wish to consider the new proposals. Taking into account the history of these proceedings, I do not find that the Petitioner can be criticized for not agreeing to further consider (or accept) the new proposals and for asking for a winding-up of these companies.

5. It is also argued on behalf of the companies (and Mr Lee) that there must be sufficient interest on the part of the Petitioner to have a winding-up ordered, relying on:

(a) French: Applications to Wind Up Companies (1993) paragraph 2.5.3 at pages 74 to 77;

(b) The decision in Re Chapel House Colliery Company (1883) 24 Ch D 259.

Having considered the whole of the evidence before me, I do not find any substance in this argument and therefore reject it.

6. As regards the company involved in HCCW 280/1999, that is, Siu Fung Ceramics Concept Company Limited, it is said that there is no or insufficient evidence that this Company has sufficient connection with Hong Kong: see French, paragraph 1.2.6.5 at pages 26 to 30. In reply to this argument, Mr Chan for the Petitioner drew my attention to paragraph 5 of the Petition in question. Having considered that paragraph of the Petition and the other evidence filed herein (including paragraphs 1 and 3 of the affirmation of Mr Lee Siu Fung and paragraphs 1 and 3 of the 2nd affirmation of Xiao Yi Li), I find that there is sufficient evidence of this company having sufficient connection with Hong Kong for a winding-up order to be considered and made.

7. The case of Re UDL Holdings Limited [1999] 3 HKC 210 was also referred to in support of the application to adjourn. I consider that the facts in that case are different from the present ones and is therefore distinguishable.

8. Ms Nevall for Mr Lee raises other grounds of objection. With respect, I do not find any of those grounds to be valid objections.

9. For the above reasons, I consider that my discretion should be exercised in refusing the application for adjournment and granting the winding-up orders sought with costs.