RE LAMTEX HOLDINGS LTD (In Liquidation)

HCCW 263/2020

[2025] HKCFI 3627

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 263 OF 2020

____________________

____________________

__________________________________

REASONS FOR DECISION

__________________________________

Application

1.  I have before me an application by the current liquidators of the Company, for an order that their resignation be accepted under Rule 154 of the Companies (Winding-Up) Rules, Cap. 32H (“Winding Up Rules”).  The liquidators also seek in paragraph 2 of the summons further directions for the appointment of new liquidators.

Background

2.  The Company was wound up in March 2021: Re Lamtex Holdings Ltd[1]. In May 2021, I made a regulating order appointing the Liquidators.  Over the past four years, the liquidators have undertaken substantial work, notably investigating a massive suspected fraud involving asset misappropriation and fictitious loans, and issuing protective writs to preserve the Company’s claims.

3.  The Liquidators’ resignation stems from serious personal safety concerns.  On 31 May 2024, Mr Yuen was assaulted by three unknown assailants in his office car park, shortly before a scheduled meeting of the committee of inspection (“COI”).  The Hong Kong Police suspect the assault was linked to his liquidation work.  This attack followed demands from certain COI members, through their solicitors, for the liquidators to convene meetings aimed at forcing their resignation and appointing specific nominees.  Although, as of today’s date, the individuals responsible for orchestrating the attack remain unidentified, these troubling events have led the liquidators to decide to resign.  The liquidators notified their intention to resign on 6 June 2024 and informed the Official Receiver on 12 June 2024.

Creditors’ meeting

4.  Pursuant to Rule 154(1) of the Winding Up Rules, the liquidators convened a creditors’ meeting on 31 December 2024 to consider their resignation and the appointment of replacements.  The meeting passed a resolution (“Nomination Resolution”) to:

(1)  Accept the resignation; and

(2)  Nominate Mr Chan Man Hoi (Ivan) of Deloitte Touche Tohmatsu and Mr Cheng Man Lung of Deloitte Advisory (Hong Kong) Ltd (“Nominated JLs”) as replacements, subject to Court approval.

Contributories’ meeting

5.  No contributories’ meeting was convened to consider the liquidators’ resignation due to impracticality.  The Company, as a former listed entity, has a large number of contributories, including 335 CCASS participants holding 1,768,202 shares via HKSCC Nominees Limited.  Convening such a meeting would be impractical, costly, and disproportionate, especially given the Company’s insolvency where creditors’ interests predominate[2].

Official Receiver’s Position

6.  The Official Receiver, in her letter dated 17 July 2025, notes the creditors’ Nomination Resolution and leaves open the possibility that the Court may appoint from the next firm on the Panel A roster if appropriate.  The Official Receiver has not received requests for meetings under Rule 45(7) of the Winding Up Rules and defers to the Court on undertakings regarding costs and remuneration.

Discussion

7.  The reason for the liquidators’ concern that the assault is connected to the liquidation are (1) the request of certain creditors that the liquidators resign and (2) the fact that it occurred on the day a meeting of the COI was to take place at which one of its member’s resolution that the liquidators resign was to be considered; although at that time the liquidators had not indicated any intention to resign.  I am satisfied that they have demonstrated a legitimate reason to be concerned about their personal safety and that in these circumstances they should be allowed to resign.  Personal reasons are a legitimate ground for a liquidator to apply to resign and Yuen J took a similar view in Re Akai Holdings Ltd[3].

8.  Rule 154 of the Winding Up Rules envisages there being a meeting of creditors and a meeting of contributories to decide whether to accept a liquidator’s resignation.  If they do not Rule 154(5) of the Winding Up Rules allows a liquidator to apply to court for an order accepting the liquidator’s resignation.  Rule 45(7) of the Winding Up Rules provides that following a resignation another liquidator may be appointed in the same manner as a first appointment.  This would require a meeting of creditors and a meeting of contributories.  However, a meeting of contributories is not practical given their number.  Section 227B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap. 32 (“Ordinance”) provides that on the application of the Official Receiver or a provisional liquidator, the court may dispense with “first meetings” of creditors or contributories and make a regulating order.  Mr Ho, who appeared for the liquidators, points out that as a meeting to replace the liquidators would not be the first meeting of creditors it is not entirely clear that section 227B allows the Official Receiver to apply for a revised regulating order appointing new liquidators.  Read in isolation rule 45 arguably allows this, but the language of the section 227B is precise and talks only of the first meetings of creditors and contributories.  The Winding Up Rules are subordinate legislation.  It is well established that “subordinate legislation is by definition subordinate to primary legislation such that, whenever there is a conflict between subordinate and primary legislation the latter prevails.”[4]  It thus seems to me that an application to under Section 227B is not the correct mechanism to use on the appointment of replacement liquidators.

9.  In my view the appropriate procedure is for the liquidators making an application for an order that their resignation is accepted to also seek an order under Section 200(3) of the Ordinance for directions for their replacement.  This is what the liquidators have done in the present case.  The alternative is for an application to be made by any person with locus (the obvious person being the Official Receiver) pursuant to Section 196(3) of the Ordinance for an order appointing somebody to fill the vacancy.

Disposition

10.  The creditors at their meeting passed a resolution nominating the Nominated JLs as replacements subject to the court’s approval.  The liquidators have not sought an order that they are appointed, although I think their position can be fairly understood to be that they are neutral, but can see no reason not to appoint the creditors’ nominees.  I think that appropriate course is for me to direct that Messrs Chan and Cheng shall be appointed as liquidators subject to the Official Receiver confirming in writing that the Nominated Liquidators have filed to her satisfaction affidavits of fitness and that she has no objection to their appointment.  I note that the Nominated Liquidators have already filed consents to act and disclosure statements.  I will also give general liberty to apply to the creditors, contributories, the Official Receiver and the current liquidators.

11.  So far as costs are concerned the Official Receiver has written to the court reminding me that it is usual for resigning liquidators and replacing liquidators to give the following undertakings to the court in respect of costs:

“(a) they will not charge any time costs in relation to the resignation of the resigning liquidators and the proposed appointment of the replacing liquidators;

(b) they will not charge any time costs for the replacing liquidators to read into the case;

(c) the charge out rates of the replacing liquidators will not be higher than that of the resigning liquidators; and

(d) they will bear the costs of and occasioned by the application personally, and will not seek to recover such costs from the estate of the company.”

12.  The liquidators have sought an order that the costs of the application are paid out of the assets of the Company.  They do so on the basis that it is reasonable for them to wish to resign given the assault on Mr Yuen.  If I so order it means the creditors pay.  It does not follow that because the court has allowed the liquidators to resign for the reasons I have explained that the creditors should have to bear the costs.  In my view the liquidators should bear their own costs.  I will, therefore, make no order as to costs.