RE COURAGE SECURITY LTD

HCCW 508/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 508 OF 2005

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D E C I S I O N

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1.  I have an application for a validation order made by Courage Security Ltd (“the Company”).  The petition to wind up the Company was presented on 6 July 2005, based on a judgment debt obtained by a former employee in the sum of HK$51,000.00.

2.  The petitioning debt is not in dispute.  The petition was adjourned three times to give the Company an opportunity to make payment.

3.  The Company has come into funds in that it has received two cheques totalling $55,000.00 odd from two major customers in August and September 2005, but is unable to pay the petitioner because its bank account is frozen due to the presentation of the petition.

4.  When the application came before Barma J on 10 October 2005, he adjourned it to today for the Company to file evidence to satisfy the court that it is solvent and whether there would be any other creditors whose interest might be prejudiced by the payment to the petitioner.

5.  The Company is in the business of providing security service at construction sites.  It has about 40 employees assigned to work at 5 sites.

6.  The Company has produced the audited accounts for the period ended 31 March 2004 and the unaudited management accounts for the period ended 30 September 2005.  The income statement as at 30 September 2005 showed a net profit for the period from 1 April 2004 to 30 September 2005 in the amount of HK$430,000.00 odd.  The balance sheet as at 30 September 2005 showed total assets exceeding current liabilities and the account receivables from 2 major customers amounted to HK$563,000.00 odd.  In addition, there is a debt of HK$424,000.00 odd owed to the Company by an ex-director.  I understand the account receivables are the service fees due from the 2 major customers, who withheld payments to the Company by reason of the presentation of the petition, after paying salaries on the Company’s behalf to its employees assigned to work on their sites.

7.  It would appear from the evidence that the Company is able to pay the petitioning debt of HK$51,000.00 and legal costs of the petitioner agreed at HK$33,700.00.

8.  Three months have passed since the petition was presented.  There is not any other creditor showing interest in these proceedings, and it does not appear that any other creditor would be prejudiced by the payment.

9.  In the circumstances, I make a validation order in respect of the payments sought in paragraph 1 of the summons, save that the amount for payment of costs in paragraph 1(c) is altered to read HK$33,700.00.  The costs of and occasioned by this application are to be costs in the cause of the petition.