NANYANG COMMERCIAL BANK LTD. v. LOONG TAI ENTERPRISE (HK) LTD.

HCCW613/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP PROCEEDINGS NO.613 OF 2000

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J U D G M E N T

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1. This is a creditor's petition in respect of sums amounting to HK$3.8 million and approximately US$251,000 advanced by way of banking facilities to Loong Tai Enterprise (HK) Limited ("the Company"). The debt is not disputed.

2. The Company was represented by its director Madam Lin and, as I understand its case, what it is offering the petitioning creditor is that it will sell an unencumbered property which it has in Hong Kong and if the proceeds are insufficient, it will "negotiate" with the petitioning creditor as regards any shortfall. The property was purchased at the end of 1995 for a sum of HK$9.9 million. In addition, the Company has also recovered various judgments against its debtors in China amounting to HK$2.34 million. The Company informed the court that it will take steps to enforce those judgments which may take approximately six months.

3. The proposal was not acceptable to the petitioner. First, it emerged that the property, although purchased for HK$9.9 million, is now worth less than HK$3 million. That, together with whatever might be recoverable under the judgments obtained in China is unlikely to be sufficient to meet the petitioning debt. Second, the sale of the property is likely to take a period of time as will the steps to enforce the judgments. Third, Company has other creditors and preference problems could arise.

4. Although there is a residual discretion in the court whether or not to make a winding-up order, on the facts, no case has been made out as would justify the refusal of a winding-up order. In those circumstances, I will make a winding-up order now and also order that the petitioner's costs be a liquidation expense.