Re: CHAN TIN CHI, a Debtor and Ex-parte: THE NATIONAL COMMERCIAL BANK LTD., HONG KONG BRANCH, a Judgment Creditor

HCB 2780/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 2780 OF 2001

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J U D G M E N T

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1. This petition for bankruptcy is based on a judgment debt in the sum of HK$72,329,832.16 with interest in High Court Action No. 4719 of 1999 dated 22 April 1999. The judgment arose out of a guarantee that was given by the debtor Mr Chan Tin Chi on 25 September 1999 to secure the indebtedness of a company known as Good Universe Limited.

2. The petitioner herein, National Commercial Bank Ltd, issued a statutory demand on the judgment debt. This was advertised in a newspaper on 1 March 2001. On 27 April 2001, the petition was filed and an order for substituted service of the petition was made on 4 July 2001. The order for substituted service has been complied with.

3. I am satisfied that the debtor has received notice of the petition against him and that he is fully aware of the hearing date of this petition because he has faxed letters and provided documents to the court on 20 June and 20 July 2001.

4. Accordingly to the debtor, he is now residing in Beijing. He has chosen not to attend court or to instruct a solicitor to represent him in these proceedings. Instead, he has authorised a friend to represent him and as I have informed his friend he has no right of audience being not a qualified person.

5. The debtor has been involved in another bankruptcy petition being HCB No. 669 of 1999, so he is fully aware of the requirements he should meet if he is to oppose the petition for bankruptcy. He has not filed any affirmation in opposition in respect of this petition, instead he has written letters to the court and has despatched some documents in a folder to the court.

6. I have nevertheless considered the documents and letters of the debtor. His grounds of opposition would appear to be as follows.

7. Firstly, it is mentioned in one of his letters to the court that he has a possible claim of an unquantified amount against the petitioner owing to the petitioner's refusal to allow the debtor or the debtor's company to let certain premises over a five-month period. Because of the delay, the debtor's plan to sell a property with the tenancy agreement to a company known as "三九投資有限公司" fell through and the debtor or his company has suffered great loss.

8. I do not regard this as a sufficient reason for opposing the petition. The alleged claim against the petitioner was not sufficiently particularised. It is unclear whether the loss was suffered by the debtor or his company or companies. No documents were provided to the court to substantiate the allegation. As I have stated previously, the debtor is fully aware of requirements of an affidavit with properly particularised reasons if he is to oppose a bankruptcy petition. This he has failed to submit to the court.

9. The second reason advanced by the debtor in opposing the petition is that he has recently made a proposal to his creditors for an individual voluntary arrangement and has engaged a firm of accountants, Grandton CPA Limited formerly known as Chow and Lee CPA Limited, to provide a repayment proposal to his debtors. Again, I fail to see this as a sufficient reason for adjourning the petition.

10. I note that the letter of the accountants was sent to the creditors only in July 2001. If the debtor is serious about an individual voluntary arrangement and having the advice of his accountants, he should be aware of the need to apply to the court for an interim order under the provisions of the Bankruptcy Ordinance. He has had plenty of opportunity to do so because he was before the court in HCB No. 669 of 1999 and he had indicated to the court on an occasion late last year of his intention to put forward a proposal to his creditor to settle his indebtedness.

11. Furthermore, I have looked at the proposal he put forward with the supporting documents. In my view, his proposal and his documents are wholly lacking in financial information to support the rosy forecast of a new company that he has given in his repayment proposal.

12. Besides, even if a bankruptcy order is made, if the debtor is serious about a voluntary arrangement, he could still apply to the court for an interim order as an undischarged bankrupt. Lastly, I have been informed by the solicitor for the petitioner that most of the creditors have rejected the repayment proposal. I note that there are three supporting creditors to this petition and they are owed debts of HK$17 million, HK$135 million and HK$57 million. The debts owed to these supporting creditors and the debt owed to the petitioner are more than half of the value of the total debts. As these creditors are all against the repayment proposal, it seems to me that any voluntary arrangement proposed by the debtor would have no prospect of success.

13. The third reason put forward by the debtor for adjourning the petition is that his other bankruptcy petition in HCB No. 669 of 1999 is to be heard on 6 and 7 September 2001. He has asked for this petition to be adjourned until after the hearing in HCB No. 669 of 1999. The present petition is wholly unconnected with HCB No. 669 of 1999. I am unable to see any reason for adjourning this petition merely because of a pending hearing in another petition against the debtor.

14. As no valid grounds have been put forward by the debtor in opposing the petition, the only course open to me is to make a bankruptcy order. I award costs of this petition to the petitioner. I understand from one of the supporting creditors who is the petitioner in HCB No. 669 of 1999 that an application would be taken out shortly to withdraw the petition in HCB No. 669 of 2000 and to vacate the hearing dates on 6 and 7 September 2001.