HAITONG INTERNATIONAL SECURITIES CO LTD v. SUN WANG GROUP INVESTMENT LTD

HCCW 384/2017

[2019] HKCFI 787

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING UP) PROCEEDINGS NO 384 OF 2017

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REASONS FOR DECISION

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1.  I have heard the summons dated 14 February 2019 (“Summons”) taken out by the petitioner and made orders on 20 March 2019. I now give the reasons for my decision.

2.  Under the Summons, the petitioner sought orders:

(1)   to dismiss the summons dated 3 January 2018 (“Discharge Summons”) taken out by the Company to discharge the appointment of provisional liquidators (“PLs”); and

(2)   to wind-up the Company (being a Hong Kong company) on insolvency grounds pursuant to the Petition presented on 4 December 2017.

3.  The Company originally opposed the Petition and sought the discharge of the appointment of PLs.  Subsequent events indicate that it is no longer the case.  The Company has not even appeared today.

4.  In particular:

(1)   Despite the Court’s directions for the filing of evidence for the Discharge Summons, the Company has not filed any such evidence, nor taken any steps to prosecute the Discharge Summons.

(2)   Further, in May 2018, a bankruptcy order was made against Mr Zheng Dunqian (“Mr Zheng”), being the sole shareholder of the Company and one of its two directors.  Then in early July 2018, the Company’s solicitors, Messrs Khoo & Co, ceased to act as solicitors for the Company.

(3)   The Company has not appeared today and is not represented by lawyers.

5.  The present Summons was issued pursuant to Harris J’s direction dated 28 November 2018. The Official Receiver has indicated that it has no objection to the orders sought.

6.  The basis of the Petition is a debt owed by the Company in the total amount of HK$116,269,588.98 (inclusive of interest) (“Debt”) arising out of a Credit Facility Agreement dated 16 November 2016 (“Facility Agreement”) entered into between the Company and the petitioner for a margin credit loan of not exceeding HK$120 million for the purpose of facilitating the acquisition and continued holding of listed securities in a margin securities account (“Account”) maintained by the Company with the petitioner.

7.  Due to the Company’s failure to pay the Debt, on 15 May 2017, the petitioner (through its solicitors) served a statutory demand (“Statutory Demand”) on the Company requiring repayment of the Debt.  Notwithstanding the Statutory Demand, the Company has failed to repay the Debt or any part thereof.  Hence, the petitioner presented the Petition on 4 February 2017.

8.  On 11 December 2017, Harris J made an ex parte order (“PL Order”) appointing the provisional liquidators on the grounds of jeopardy to the Company’s assets.  On 12 December 2017, the petitioner issued a summons (“Continuation Summons”) to continue the PL Order until further order of the Court.

9.  On 3 January 2018, the Company issued the Discharge Summons seeking to set aside the PL Order and to discharge theappointment of the provisional liquidators.  On the same day, the Companyfiled a hastily prepared affirmation in the form of the Affirmation of Cheng Cheuk Him (“Cheng Aff”) in support of the Discharge Summons.

10.  On the return date 8 January 2018, Harris J gave inter alia directions for the filing of affirmation evidence (i) in opposition to the Petition; and (ii) in reply to the petitioner’s affirmation in opposition to the Discharge Summons.  His Lordship then adjourned the Petition, Continuation Summons and Discharge Summons for substantive arguments, with 1 day reserved.

11.  The petitioner duly filed its affirmation evidence in relation tothe Discharge Summons (it having already filed evidence in relation to thePetition and the Continuation Summons).  Yet, the Company did not file any affirmation evidence in relation to the Discharge Summons, Continuation Summons or the Petition.

12.  On 6 August 2018, the petitioner wrote to the Company (which letter was sent to the Company’s registered office addresses as wellas Mr Zheng’s residential address in the PRC and his email address) askingit to confirm within 14 days whether it intended to oppose the Petition andthe Continuation Summons, and whether it intended to pursue and prosecutethe Discharge Summons.  However, the Company gave no response withindeadline or at all.  It is therefore plain that the Company no longer has anyintention to oppose the Petition or to pursue the Discharge Summon.  This has been confirmed by the absence of the Company at today’s hearing.

13.  On 14 November 2018, the petitioner wrote to Court informing Harris J of the developments since the making of the PL Order.  That letter was copied to the Company at its registered office addresses as well as Mr Zheng’s residential address in the PRC and his email address.

14.  By a letter dated 28 November 2018, Harris J directed the petitioner to issue the present Summons.  The Summons (with supporting affirmation) and notice of today’s hearing (with skeleton arguments and authorities) had been duly sent to the Company in similar fashion as aforesaid.

15.  In the circumstances, there can be no dispute about the Debt and the Company’s inability to pay the same.  The Company is clearly insolvent.  It is also clear that the Company is no longer contesting these proceedings or the making of a winding-up order.  This Court thus makes the following orders:

(i)   The Discharge Summons dated 3 January 2018 issued by the Company be dismissed;

(ii)   The Company shall be wound-up;

(iii)   Costs of the Petition; costs of and incidental to the petitioner’ssummons dated 14 February 2019; and costs of and incidental to the Company’s Discharge Summons dated 3 January 2018 be paid to the petitioner out of the Company’s assets.