RE LIU FU ON

HCB 5057/2025

[2026] HKCFI 619

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 5057 OF 2025

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REASONS FOR JUDGMENT

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1.  At the hearing of the Petition presented on 30 June 2025 by Chun Yang International (HK) Company Limited (“Petitioner”), I made a usual bankruptcy order against Liu Fu On (廖富安) (“Debtor”). These are the reasons for my judgment.

2.  By a service agreement dated 24 March 2023, the Petitioner agreed to provide logistics and storage service at a warehouse to the Debtor at a monthly fee of HK$399,000 plus utility expenses payable in advance by the 7^th day of each month (“Service Agreement”).

3.  In breach of the Service Agreement, the Debtor failed to pay HK$3,588,350.94, being the aggregate amount due under the debit notes issued by the Petitioner from 1 June 2023 to 5 August 2024. This led to the Petitioner serving a statutory demand on the Debtor on 20 August 2024 requiring him to pay the amount due within 21 days thereof (“SD”).

4.  The Debtor made partial payment in the amount of HK$1,474,560, leaving an unpaid balance of HK$2,113,790.94 (“Unpaid Sum”). No further payment was made whereupon the Petition was presented on 30 June 2025 on the basis that the Debtor was unable to pay the Unpaid Sum.

5.  On 28 October 2025, the Debtor filed an affirmation (“Debtor 1^st”) raising the following grounds in opposition to the Petition:

(1)  Mr Ng Wing Hoi (“Ng”) of Hi-Speed Supply Chain Ltd (in liq) (“Hi-Speed”), the ultimate user of the warehouse, came to an agreement with the Petitioner’s chairman that no service fee would be charged for the 2 months during which the warehouse was closed. Therefore, the amount payable under the debit notes dated 22 June and July 2024 should not have been charged, and the Debtor was only liable to pay HK$1,585,790.94 (“Undisputed Sum”).

(2)  Ng provided a written personal guarantee dated 19 January 2024 in respect of service fee incurred by the Debtor from 1 April 2023 to 31 March 2024 for an amount not exceeding HK$7,000,000 (“Guarantee”). Hi-Speed has sufficient assets to enable Ng to discharge the obligation under the Guarantee.

(3)  Hi-Speed is the ultimate debtor in respect of the Undisputed Sum and the Debtor should not be liable for the same.

6.  At the first callover hearing of the Petition held on 17 November 2025:

(1)  This Court did not consider that the grounds raised in Debtor 1^st constitute a bona fide dispute on substantial grounds in respect of the Undisputed Sum given that (a) the alleged waiver of fee was not supported by any document; (b) the Guarantee was not known to the Petitioner until Debtor 1^st was filed and on the face of the Guarantee, it had already expired on 31 March 2024; (c) the Guarantee would not have the effect of taking away the Petitioner’s right to seek repayment of the Undisputed Sum from the Debtor; and (d) Hi-Speed was not a party to the Service Agreement and in any event, Hi-Speed was grossly insolvent and did not have the means to pay the Undisputed Sum.

(2)  The Petitioner contended that on the Debtor’s own case (which it did not accept), he owed the sum of HK$530,049.00, being the outstanding fees from April to June 2024 (“Admitted Debt”). There was no evidence to suggest that the Debtor had the means to pay the Admitted Debt.

(3)  The Debtor asserted that he had been in the process of selling his property and the proceeds could be applied to repay the Admitted Debt.

(4)  Although no evidence was filed by the Debtor in support of his assertions, this Court was prepared to give a chance to the Debtor to file evidence to demonstrate that he had the means to pay at least the Admitted Debt.

(5)  The Petition was adjourned with leave to the Debtor to file a further affirmation by 1 December 2025 dealing with the Admitted Debt, and the property said to have been put up for sale.

7.  On 1 December 2025, the Debtor filed his 2^nd affirmation (“Debtor 2^nd”) which shows that:

(1)  In September 2021, the Debtor purchased a property at Fairview Park (“Property”) for HK$11 million.

(2)  The Property was subject to an “all monies” mortgage dated 19 November 2021 and a second mortgage dated 22 February 2022 both in favour of DBS Bank (Hong Kong) Ltd.

(3)  The bank commenced proceedings on 13 January 2025 (in HCMP 62/2025) to seek payment of HK$7,708,894.77 together with interest accrued thereon from 1 May 2025 and costs (HK$38,645) and possession of the Property.

(4)  A notice to quit dated 22 September 2025 was issued by the Bailiff requiring the Debtor to deliver vacant possession of the Property by 29 September 2025.

(5)  The desktop valuation shows that the market value of the Property is HK$9,770,000. Once the bank sold the Property and repaid the amount owed, there would be surplus available to pay the Admitted Debt.

(6)  The Debtor asks for a 4-months’ adjournment to allow the bank to sell the Property so that he can repay the Admitted Debt.

8.  The Debtor did not appear at the hearing.

9.  Mr Wong Hok Yan, counsel for the Petitioner, submitted that taking into account the interest accrued on the amount due, as at the date of the hearing, the total amount owed by Debtor to the bank was HK$8,321,171.72. The desktop valuation was not prepared by a valuer and could not reflect the market value of the Property. As the Property would be sold by way of a forced sale, it was reasonable to assume that the selling price would be at least 10% lower than the market price. Thus, the surplus available to the Debtor would be HK$471,828.28, less than the Admitted Sum.

10.  For the reasons set out in §6(1) above, I do not think that there is a bona fide dispute in respect of the Undisputed Sum.

11.  It is well established that the Bankruptcy Court would not grant an adjournment where there is no credible evidence to show that payment would be forthcoming within a reasonable time (Re Margaret Chiu [2020] 5 HKC 453, §67).

12.  In the present case, even assuming the Property could be sold immediately at the same price as the desktop valuation (HK$9,770,000), after repaying the amount owed to the bank (HK$8,321,171.72) and the expenses to be incurred in the sale (say HK$100,000), the surplus available to the Debtor (HK$1,348,828.28) would not be sufficient to pay the Unpaid Sum (HK$2,113,790.94). In the circumstances, it is clear that the Debtor is unable to pay his debt and should be adjudged bankrupt.