RE WEITA PACKING MATERIAL INTERNATIONAL GROUP CO LTD (in Liquidation)

HCCW 184/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 184 OF 2008

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D E C I S I O N

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1.  This is an application by the contributories for a permanent stay of the winding-up order.

2.  Under section 209(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 (“the Ordinance”), the court has power to stay a winding-up order altogether or for a limited time on such terms and conditions as the court thinks fit.  Where proceedings are stayed altogether, the liquidation for all practical purposes is at an end and the liquidator may be discharged.  The burden is on the applicant to establish a sufficient case for a stay to be granted. 

3.  The factors that the court will take into consideration include the following:

(a)  Whether the debts of the company are paid or satisfactorily provided for;

(b)  Whether the debts and expenses of the liquidation are paid;

(c)  Whether the affairs of the company would require investigation in a winding-up;

(d)  Whether there is a genuine commercial reason in staying the winding-up.

See Re Huaqing Oriental Mining (Holdings) Ltd [2003] HKCU 735, §§2 and 3; Re Bloxworth Enterprises (HK) Ltd [2013] HKCU 2661 at §11.

4.  The Company was primarily an investment holding company.  The winding-up order was granted on 16 July 2008 on the petition of the Bank of China (Hong Kong) Ltd (“the Petitioner”) on the ground of the Company’s inability to pay its debts.  Liquidators were appointed.

5.  One Mr Zhan and Madam Zhang were the only contributories (“the Contributories”) and directors of Weita Packing Material International Group Co Ltd (“the Company”) immediately before the winding-up. 

6.  Applying §3(a) above, there are no outstanding liabilities and the Company is solvent.  The only proof of debt that the Liquidators obtained was from the Petitioner.  That debt has been admitted and paid in full together with interests.  On 15 November 2012, the Petitioner assigned to a company called Harvest Plus Enterprises Ltd (“Harvest Plus”) all the outstanding indebtedness due to the Petitioner, which the Liquidator has also settled (representing interest on the proved debt).  The taxed costs of the petition have been fully paid. 

7.  Applying §3(b) above, the Contributories have undertaken to pay for the expenses of the liquidation and the costs of this application.

8.  Applying §3(c) above, there is nothing which require investigation, as confirmed by the Liquidators and the Official Receiver.

9.  Applying §3(d) above, the Company has beneficial interests in two PRC companies. A share purchase agreement dated 2 February 2016 has been signed whereby Harvest Plus would purchase from the Contributories their 100% shareholding in the Company at a consideration.  The completion of that agreement is conditional upon retention of the Company’s shareholding in the two PRC companies and a permanent stay of the winding-up proceedings by 30 September 2016.  In my view, there is a genuine commercial reason for the winding-up proceedings to be permanently stayed.

10.  The Liquidators and Official Receiver have maintained a neutral stance in this application.  I am satisfied that a permanent stay of the winding-up proceedings should be granted. 

11.  I make an order accordingly.  I also order that a copy of this order should be served on the Companies Registrar pursuant to section 209 of the Ordinance, and that a copy of this order be published in the gazette.

12.  I thank Mr Albert Chan for his assistance.