RE: CHENG WIE, a Debtor and EX PARTE: PO SANG BANK LTD., a Petitioner

HCB3565/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO.3565 OF 1999

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R E A S O N S

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1. This bankruptcy petition is based on unpaid debts totalling approximately $1.162 million. At the first hearing on 28 February 2000, a two-week adjournment was granted to enable the debtor to obtain a valuation of office premises and a carpark which he owns. According to the petitioner, the office and carpark together are valued at approximately $675,000.

2. At the adjourned hearing, no valuation had been procured although the debtor intimated that two banks had given an oral estimate but they needed to inspect the property and sought to imply that as possession had been taken by the petitioner, he was unable to obtain access for the purposes of the valuation. The debtor further advised the court that his mother was about to have an operation in Shanghai and as there was no one else to take care of her, he had to go and for that reason sought a three-week adjournment.

3. A 14-day adjournment was granted, and the debtor was provided with the name of the contact person at the firm of solicitors representing the petitioner for the purposes of gaining access to the property.

4. On 25 March 2000, two days prior to the adjourned hearing, the debtor sent a letter by fax to the court to the effect that his mother had just been undergone surgery and needed to be in hospital for a further two weeks. He therefore sought a further adjournment and reiterated that he believed the office premises to be worth approximately $610,000 and the carpark $300,000. On those assumptions, the shortfall would only be $150,000 which he would be in a position to repay.

5. Upon receipt of that letter, the hearing scheduled for 27 March was vacated and adjourned for a further seven days. The debtor was directed to submit evidence of his mother's hospitalization and to take immediate steps to cause a valuation to be obtained. It would appear that during the previous two-week adjournment, no effort had been made to contact the petitioner's solicitors for access.

6. The debtor did not appear at the adjourned hearing on 3 April 2000. Further, no steps had been taken in the interim to obtain access for the purpose of a valuation. On 1 April 2000, a facsimile was received from the debtor to the effect that he had to remain in Shanghai to care for his mother and sought an adjournment until 28 April 2000.

7. In deciding whether or not to accede to the debtor's application, the court has to consider whether the indisposition of the debtor's mother was a convenient excuse for him to delay matters. After all, the only issue is the valuation of the office premises and the carpark. The petitioner's valuation of the two properties together is in the region of $675,000. If that were a realistic valuation, there is no evidence that the debtor would be in any position to meet the shortfall.

8. Despite the assertions of the debtor as to the value of the properties (aggregating some $910,000), and despite the fact that he has had since 28 February to come up with a valuation to substantiate the value he ascribed to the properties, he has not done so. A valuation merely requires instructions from him to the valuers and does not require his physical presence in Hong Kong. The fact that no attempt has been made to contact the petitioner's solicitors for access whilst contending that he had been "obstructed" by the petitioner in obtaining access is a little disingenuous. Had he taken steps to obtain a valuation, that would have been evidence of his good faith. He has not done so, and in all the circumstances, it would not be right to grant any further adjournments. Accordingly, a bankruptcy order was made at the hearing on 3 April 2000 with costs to the petitioner.