In re Lisgold Holdings Ltd.

1997, No.CWU 553

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP)

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R E A S O N S

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1. The Petitioner which is a bank obtained judgment against the Company on 1 August 1997 in the sum of over HK$6 million together with interest. A statutory demand was served on the Company on 12 September 1997 which remains unpaid. The Petition is based on the statutory demand and asserts that the Company is insolvent and unable to pay its debts.

2. The Petition came on for hearing on 22 December 1997. It was opposed by the Company and an affirmation was filed by Chan Kueng Un, a director of the Company. The affirmation referred to the fact that the Company has joint ventures with various companies and entities and that if these joint ventures turn out to be successful, they will resolve the Company's financial difficulties. At the hearing on 22 December, I found that the evidence was less than satisfactory and adjourned the hearing for 14 days to enable the Company to file further evidence, in particular, as to any repayment proposals. At the adjourned hearing, I made the winding up order. The reasons appear below.

3. The debt is not disputed. A short affirmation was filed by Chan Yok King, the manageress of the Company prior to the adjourned hearing but no concrete proposals were made for the repayment of the debt. Apart from adducing evidence that it had obtained credit facilities of US$1 million from Fook Tai Credits Limited, it was asserted that Fook Tai had no objection to the Company settling the outstanding debt by instalments out of profits to be made by the Company under a joint venture agreement. A further affirmation prepared for the hearing fixed for 7 January of the Company's application to stay execution of the judgment debt was also put before the Court. That affirmation is in substance the same as that filed by Chan Kueng Un to oppose the Petition save that it contains a proposal that the judgment debt be repaid by 60 equal monthly instalments.

4. It is the Company's contention that in the exercise of the court's discretion, the court ought not make a winding-up order. A more unmeritorious submission in the circumstances is difficult to envisage. The Company's proposal is not that monies to be obtained under the credit facilities are to be applied to discharge the debt. Even if that had been the case (which it is not), it is difficult to see why it would be fair and just to exercise my discretion in such a way as to require the judgment creditor to be repaid over a period of five years. On the evidence as filed, the proposal simply is that if the Company enters into the joint venture (and it is by no means certain that it has been selected to be the joint venture partner in the project in Indonesia), the debt is to be repaid out of profits to be earned. Such profits of course have not materialised and may never materialise. The credit facilities obtained are to be applied towards the joint venture rather than for the repayment of the debt.

5. In all the circumstances of this case, there is no valid reason not to make the winding-up order to which the judgment creditor, whose debt is not disputed, has a prima facie right.