RE KARSUN INTERNATIONAL (HOLDINGS) LTD.

HCCW627/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO.627 OF 1999

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J U D G M E N T

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1. This is a petition to wind-up Karsun International (Holdings) Limited ("the Company") based on an unpaid debt of approximately HK$342,000 and US$979,000.

2. On 20 September 1999, a 28 day adjournment was granted for the parties to attempt to negotiate a settlement. A proposal had been put forward and this was set out in the affirmation of Cheung Hoi Ching dated 18 September 1999. The parties have failed to reach any agreement and the petition is now before me.

3. In the affirmation of Cheung Hoi Ching, reference was made to the fact that the Company had entered into two agreements to sell the two properties that it owns in the sum of $3.7 million and $2 million respectively. The initial deposit was payable on 2 October and a further deposit is due on 2 November. In addition to the two properties, the Company also owns 79 cartons of electronic component parts. The Company has apparently entered into a sale and purchase agreement with one purchaser to sell the same for $1.6 million. Taking the sale proceeds into account, there would still be a shortfall of $700,000. This, according to the affirmation of Cheung Hoi Ching, would be repaid by six equal monthly instalments commencing on 1 October 1999.

4. Counsel for the Petitioner informed the court that no agreement has been reached. The proposal contained in Cheung's affirmation was rejected by the bank. No monies were paid to the bank either on the 1 or 2 October as had been the apparent intention of the Company as stated in Cheung's affirmation.

5. The Company now seeks a further adjournment in the hope that the Petitioner would reconsider its position as regards the proposal. That, of course, is entirely unrealistic. The Company has had four weeks within which to persuade the Petitioner to accept the proposal. What has been placed before this court is a 'without prejudice' letter dated 13 October seeking the Petitioner's views as to whether it had accepted the proposal contained in that affirmation. This was some two weeks after the payments stated in the affirmation ought to have been made and three and a half weeks after the last hearing. It seems to me that the Company is not serious in its efforts to reach a negotiated settlement with the Petitioner. It now informs the court that the sales have been put on hold because the bank holds the title deeds and unless it was going 'to play ball', the purchasers were unwilling to proceed.

6. It was also suggested that the petition would be resisted on the grounds that the Petitioner is a secured creditor. But the point here is that the security, on any view, can only satisfy part of the debt : the Petitioner is unsecured as regards the balance. There is certainly no viable proposal before this court for the discharge of this indebtedness.

7. Nothing, I think, can be achieved by way of further adjournments. The opposition to the petition is not based on any substantial ground and for those reasons, I will make a winding-up order.