YU YI MUN v. PUI CHIU WING AND ANOTHER

HCCW 494/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 494 OF 2004

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J U D G M E N T

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1.  This is a Notice of Motion under section 209 of the Companies Ordinance, Cap. 32.  It was taken out on 4 March 2005 by Yu Yi Mun, a contributory of Fairlady Fashion Limited (in liquidation)(“the Company”), seeking an order that all further proceedings in the winding up of the Company be permanently stayed.

2.  The applicant is a director and majority shareholder of the Company, which was incorporated on 5 November 1991 under its former name and acquired by the applicant and her brother Yu Kin Fung for the business of manufacture, wholesale and retail of ladies’ garments.  All shares issued to the shareholders have been fully paid up.

3.  Save for HCA No. 3205 of 2003, which involved a claim for arrears of rent by Hang Lung Park-in Limited (“Hang Lung”) and which led to the winding-up order on a petition made by this judgment creditor, there were no other legal proceedings against the Company.  The winding-up order was made on 23 June 2004.  Messrs Pui Chiu Wing and Alex Li Yiu Keung were appointed provisional liquidators by the Official Receiver on 23 June 2004.

4.  The applicant is desirous of reviving the Company and resuming its business.

5.  By letter dated 6 October 2004, the provisional liquidators indicated to the applicant’s solicitor that they would have no objection to stay the winding-up order permanently, on condition that the applicant is to settle the costs and contingent liabilities of all creditors and the costs of the provisional liquidators.

6.  At the time of the winding-up order, there were 4 creditors: Hang Lung, Pang Hon & Partners (“the auditors”), the applicant and Yu Kin Fung.  I understand from the provisional liquidators that no proofs of debt have been received.

7.  According to the statement of affairs dated 24 December 2004, the Company has an estimated deficiency of HK$5,084,873.44.

8.  A Deed of Compromise and Arrangement dated 29 November 2004 was entered into between the applicant and Hang Lung, for settlement of the judgment sum in HCA No. 3205 of 2003.  It was provided that on full payment of HK$200,000.00 to Hang Lung, it would forgo all claims against the Company and all costs and disbursements incurred up to date and would use it best endeavours to assist the applicant in obtaining a permanent stay of the winding-up order.  By 28 December 2004, the applicant had fully settled the amount under the Deed.  This was confirmed by letters and receipts from Hang Lung’s solicitors dated 22 November 2004 and 28 December 2004.

9.  On 28 December 2004, the applicant had also settled in full the costs and disbursements of the auditors at HK$18,450.00.

10.  An outstanding sum of HK$4,850,117.27 is due from the Company to the applicant.  She executed a Deed of Release and Undertaking dated 27 January 2005 to release the Company from this debt and waive the sum absolutely.  She also undertook to settle all costs, disbursements, expenses and other sums incurred in the application to stay the winding-up order permanently.

11.  As for the debt of HK$49,540.00 due to Yu Kin Fung, he also executed a Deed of Release and Undertaking on 27 January 2005 to release the Company from this debt and to waive the amount absolutely.

12.  The applicant has undertaken to settle the costs of the provisional liquidators in the liquidation and in this application subject to taxation.  I was informed at the hearing today that the applicant will pay within 7 days hereof HK$50,000.00 to the provisional liquidators as costs on account, subject to the amount of fees allowed to the provisional liquidators on taxation.  This proposal is acceptable to the provisional liquidators.

13.  Thus, all debts and expenses of the liquidation have either been fully paid up or compromised.  I understand that the applicant would put in an amount as working capital to assist the Company in its operation.

14.  The provisional liquidators have no objection to this application.  It does not appear there are any irregular matters or affairs of the Company that would require investigation.  Audited accounts of the Company were prepared up to the financial year ended 31 March 2004.  The applicant had submitted a preliminary examination of director dated 24 December 2004 to the Official Receiver.  The statement of affairs and the preliminary examination of director were accepted by the provisional liquidators.

15.  I therefore make the following orders:

	Upon the undertaking of the applicant and Yu Kin Fung, the shareholders of the Company, in two Deeds of Release and Undertaking both dated 27 January 2005,
1.	all further proceedings in the winding up of the Company be permanently stayed under section 209(1) of the Companies Ordinance, Cap. 32;
2.	the Company is to deliver a copy of this order to the Registrar of the Companies forthwith under section 209(3);
3.	the Company is to place in the Gazette a notice of this order at the expense of the applicant within 7 days hereof; and
4.	the applicant is to pay the provisional liquidators’s costs in the liquidation and in this application and that HK$50,000.00 is to be paid to the provisional liquidators as costs on account within 7 days hereof pending taxation of the fees of the provisional liquidators.