RE WONG YEE CHUK

HCB 9063/2025

[2026] HKCFI 1741

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 9063 OF 2025

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REASONS FOR JUDGMENT

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1.  By Petition presented on 26 November 2025 the petitioner, Mr Lo Po Wai Harry (羅保偉) (“Petitioner”), seeks a bankruptcy order against Mr Wong Chuk Yee (黃宜祝) (“Debtor”) on the ground that the Debtor failed to comply with a statutory demand served upon him on 25 August 2025 (“SD”), requiring him to pay the sum of HK$1,182,041.45 (“Debt”).  At the 2^nd callover hearing of the Petition, I made a usual bankruptcy order against the Debtor.  These are the reasons for my judgment.

2.  The Debt arose out of a costs order made by Keith Yeung J on 12 March 2024 in HCMP 1444/2022 where His Lordship found[1] that the Debtor had been in contempt for failing to comply with the orders made by this Court on 6 January 2022 and 27 May 2022 in HCMP 719/2021, which required the Debtor to produce for the Petitioner’s inspection the specified accounting records of Harsen Industries Limited (“HIL”) and 5 entities established in the Mainland. 

3.  By order made on 20 May 2024, the learned Judge imposed a fine of HK$150,000 and ordered the Debtor to bear 75% of the costs of and occasioned by the contempt proceedings on an indemnity basis.  There is no appeal against the Contempt Judgment or the costs order.

4.  After taxation, the costs payable by the Debtor to the Petitioner were assessed at HK$1,069,765.25 and the amount was certified by an Allocatur dated 29 July 2025.

5.  As at the date of the SD (9 August 2025), the amount due inclusive of interest was HK$1,182,041.45 (i.e. Debt). 

6.  It is indisputable that the Debtor is liable to pay the Debt.  Despite having been served with the SD on 25 August 2025, the Debtor did not pay, secure or compound for the Debt. 

7.  On 26 November 2025, the Petition was presented, and was scheduled to be heard before a Master on 10 February 2026.

8.  The Debtor filed a notice of intention to oppose petition on 5 February 2026 stating that he intends to show cause against the Petition on the ground that he has “made sufficient efforts in the past and in the petition to offer to secure the debt in respect of which the petition is presented and that the offer has been unreasonably refused”, and the court ought to dismiss the Petition under s.6D(3) of the Bankruptcy Ordinance (Cap. 6) (“BO”).   

9.  In his affirmation filed on 5 February 2026 (“Wong 1^st”), the Debtor says that he has “every intention of satisfying [his] obligation due to the Petitioner” in that:

(1)     He has “sufficient means to pay the Debt”, and he intends to do so “by appropriating [his] entitlement to the liquidation proceeds of a Mainland company called NHEL” (§3).

(2)     The Debtor, the Petitioner and Mr Pan Shi Liang (“Pan”) are also entitled to the liquidation proceeds, but the Petitioner and Pan “unreasonably refused” to let the Debtor uses the fund available to pay the amount owed to them (§3).

(3)     The Debtor holds 40% shareholding in Harsen (China) Limited (“HCL”), while the Petitioner and Pan hold 40% and 20% respectively.  HCL owns 100% equity in Foshan Nanhai Harsen Electric Co.  Limited (佛山市南海凱訊電器有限公司), a company established in the Mainland (“NHEL”).  Before its liquidation, NEHL engaged in manufacturing and production of electrical products and owned a factory and a piece of land in Nanhai (§6).

(4)     In 2015, the Debtor, the Petitioner and Pan started to have disagreement over the way HCL, HIL and Harsen Engineering Ltd (“HEL”) had been run.  In 2016, the Debtor presented 3 petitions in HCMP 3363, 3365, 3366/2016 against inter alios the Petitioner and Pan on the ground that the affairs of HCL, HIL and HEL had been conducted in an unfairly prejudicial manner (“UP Proceedings”).  On the other hand, Pan commenced a statutory derivative action (on behalf of HIL) in HCA 193/2018 against the Debtor for breach of fiduciary duties and account of profits (“HCA”).  The trial of the 4 proceedings was heard in December 2023.  By judgment handed down on 11 June 2024, the UP Proceedings were dismissed, and the Debtor was found to have acted in breach of fiduciary duties owed to HIL and was ordered to account for profits made in HCA (“UP Judgment”)[2] (§§7-10).   

(5)     In the UP Judgment, the court found that the Debtor had caused Yibao (a Mainland company controlled by him) to apply for liquidation of NHEL, which constituted a breach of his fiduciary duties owed to NEHL (§§11, 13).

(6)     In the UP Judgment, the Debtor was ordered to pay 70% of the costs of the Petitioner and Pan in the UP Proceedings, and all the costs of HCA to Pan (§12).

(7)     In October 2022, NHEL was ordered to be placed in compulsory liquidation and the Mainland court appointed a liquidation committee over NHEL (“Committee”).  The assets of NHEL were sold by auction in 2023. Since then, the Committee reported to the Debtor, the Petitioner and Pan (qua shareholders of HCL) about the progress of liquidation (§§13-14). 

(8)     By notice dated 1 November 2024, the Committee indicated that upon settling the costs of liquidation and payment to creditors, net proceeds in the amount of RMB 20,638,210.92 (“Net Proceeds”) will be distributed to HCL (qua sole shareholder of NHEL) (§15).

(9)     In April 2025, the Debtor through his solicitors, Messrs. Lau Chan Ko (“LCK”), approached the solicitors for the Petitioner and Pan to sound out the idea of using his 40% share of the Net Proceeds to discharge his liability under various costs orders including the Debt.  However, the Petitioner claims that the Debtor had caused loss to NHEL and his share should be used to pay damages to HCL/NHEL, while Pan mentioned the uncertainty regarding the remittance of the funds to Hong Kong (§§16-17). 

(10)     Upon receiving the SD, the Debtor through LCK offered (a) to use the Net Proceeds to secure the amounts owed to the Petitioner and Pan; (b) to share the Net Proceeds pro rata which should take place in the Mainland to avoid any difficulty in remitting the funds to Hong Kong; (c) to execute a legal assignment to assign his share of the Net Proceeds in satisfaction of taxed costs or agreed costs due to the Petitioner and Pan.  His attempts were “futile” as the Petitioner and Pan took a very firm stance, citing the wrongful liquidation of NHEL (§18).

(11)     In the notice dated 15 October 2025, the Committee stated that the Net Proceeds cannot be remitted to HCL’s bank account in Hong Kong because NHEL needs to first deregister its foreign direct investment (“FDI”) status and, for that purpose, needs to cancel its tax registration.  The tax registration cannot be cancelled as NHEL needs to pay tax for HCL.  The Committee wanted to transfer the Net Proceeds to HCL in the Mainland instead but unable to contact HCL (§§19-20).

(12)     In the notice dated 31 December 2025, the Committee stated that the main work for the liquidation had been completed.  After paying the filing/handling fee and the Committee’s remuneration, the balance in the amount of RMB 21,378,855.18 (“Net Balance”) subject to an outstanding litigation concerning a claim of RMB 1,016,184.75 against NHEL.  The Committee reiterated that the Net Balance could not be remitted to Hong Kong until after deregistration of FDI status, but the funds can be paid to HCL or its shareholders through their bank accounts in the Mainland (§§22-24).

(13)     The Debtor’s 40% share in the Net Balance comes to RMB 8,551,542.07 (or HK$9,630,114.95), which is more than sufficient to pay the sums due to the Petitioner and Pan (§§25, 33).

(14)     HCL does not have, and will not be able to open, a bank account in the Mainland.  The Committee already mentioned that the Net Balance could be distributed to the 3 shareholders, and the Petitioner (who mainly resides in the Mainland) and Pan (a Mainland resident) must have bank accounts in the Mainland.  He has been asking the Petitioner and Pan to provide their consent for the arrangement but to no avail (§§26-28). 

(15)     Alternatively, the Debtor can bring his share of the Net Balance from the Mainland and pay the Debt within 28 days after he received the same (§29).

(16)     In addition to the Debt, the Debtor also has the following liabilities (§§30-31, 38):

(a)     HK$1,687,421, being the taxed costs of the UP Proceedings payable to Pan, for which a statutory demand has been issued;

(b)     Untaxed costs of UP Proceedings payable to the Petitioner;

(c)     HK$180,000, being the costs assessed by this Court on 13 January 2026 payable to the Petitioner;

(d)     HK$800,000, being the costs of HCA payable to Pan, which has not been taxed; and

(e)     HK$2,500,000, being the legal fees owed to LCK.

(17)     The Debtor and his wife together own 50% shareholding in HIL, and the Debtor holds 40% shareholding in HEL.  HIL and HEL each holds an office unit and their total size is over 2,169 sf and its estimated worth is HK$9 million.  If the Petitioner and Pan agree to sell the office, his share of the sale proceeds can be applied to satisfy the debts owed to them (§40).

(18)     The Debtor gives an undertaking to the court to use, conditional upon the concurrence of the Petitioner and Pan, so much of his share of the Net Balance to pay (a) the Debt to the Petitioner; (b) the taxed costs of UP Proceedings to Pan; and (c) the assessed costs of HK$180,000 to the Petitioner, all with interest accrued up to 10 February 2026 (§§42-43).

10.  At the first callover hearing before this Court on 16 February 2026, Mr Chan Suk Ching, solicitors for the Petitioner, asked for an immediate bankruptcy order on the grounds that:

(1)     The Debt was not in dispute;

(2)     The Debtor did not have cash or readily realizable assets to pay the Debt and the other debts which comprised (a) HK$1,687,421 payable to Pan; (b) the assessed costs of HK$180,000 payable to the Petitioner; (c) the untaxed costs of the UP Proceedings payable to the Petitioner; (d) damages of no less than RMB 18 million payable to HCL/NHEL due to “his illegal liquidation of NHEL”; (e) damages payable to HIL in HCA; and (f) untaxed costs of HCA payable to Pan;

(3)     The Debtor’s unreasonable proposal to use the Net Balance belonging to HCL to pay the Debt and other liabilities had already been rejected by all shareholders; and

(4)     If the Debtor wished his proposal “to be looked at with sympathy”, it was incumbent upon him “to be full, frank and open with the Petitioner in respect of the statements of his position”, citing Re Lee Priscilla Hwang, HCB 7452/2009, 4 September 2009, §11.  Despite repeatedly requested by the Petitioner, the Debtor failed to make full and frank disclosure of his actual financial information for the Petitioner’s consideration. 

11.  On the other hand, Mr Albert Yau, counsel for the Debtor, submitted that the Petition should be dismissed as the Debtor had “made an offer to secure the Debt”; “the acceptance of that offer would have required the dismissal of the Petition; but the offer had been “unreasonably refused”, reliance was placed on s.6D(3) of the BO. Mr Yau expressly disavows any reliance on the “offer to compound” limb under s.6D(3).

12.  This Court indicated to Mr Yau that it was open to the Debtor to create a security over his share of the distribution to be made by NHEL (and, indeed, any assets the Debtor claims to have), which was one of the means available to him to comply with the SD.  It was not good enough for the Debtor to assert that he had made an offer to secure the Debt without taking the actual step in creating or executing the security.  It was made clear to the Debtor that if he failed to take step to at least create a valid security in favour of the Petitioner to cover the liability under the Debt, it was likely that this Court would at the next hearing make a bankruptcy order against him.  On that basis, the Petition was adjourned for 4 weeks to a second callover hearing.

13.  At the second callover hearing, Mr Chan submits that there is no valid ground in opposition to the Petition given that:

(1)     The Debtor still fails to pay the Debt or to make full and frank disclosure of his financial position[3].

(2)     HCL has commenced legal proceedings against the Debtor “for his wrongful liquidation of NHEL given the liquidation costs and expenses have been ascertained”, the loss suffered  by HCL was no less than RMB 16 million[4].

(3)     The Debtor’s repayment proposal is “misconceived” as the Net Balance belongs to HCL, and the Debtor is not entitled to use such fund to pay the Debt.  In any event, the fund is an asset out of Hong Kong and the liquidation of NHEL is still in progress owing to the ongoing litigation brought by Yibao (controlled by the Debtor) against NHEL and the financial position of HCL needs to be audited.

14.  Mr Yau contends that the Debtor has made “a reasonable offer to secure the Debt, meaning that the Debt will be repaid in due course and the Petitioner’s interest will be protected in the meantime until satisfaction” for the following reasons:

(1)     The Debtor caused a letter to be sent to the Petitioner and Pan, informing them that the Debtor “will sign the instrument agreeing to assign out of his share of entitlement to the proceeds of liquidation of NHEL … HK$4,000,000 to the Petitioner in satisfaction of the Debt and as security for the Petitioner’s other legal costs, including those which have yet to be taxed or presented for taxation”.  The Debtor “will sign similar instrument agreeing to assign out of the said entitlement HK$2,600,000 to [Pan] in respect of the legal costs owed to him and to secure his costs which remain to be taxed or may arise”. 

(2)     The Debtor intends that this “agreement to assign” to be legal and binding on him, citing Halsbury’s Laws of Hong Kong, §40.381-40.383.

(3)     The Petitioner’s “perceived difficulties of the Debtor in securing and later repaying the sums due to him are self-engineered”.

(4)     The outstanding claim by Yibao against NHEL is only for RMB 1,016,184.75, and will not significantly alter the liquidation process. 

(5)     It is “oppressive and unjust” for the Petitioner to seek to bankrupt the Debtor and cause HCL to re-litigate issue concerning the liquidation of NHEL when the same has already been determined in the UP Proceedings.

15.  As a result of the Debtor’s failure to comply with the SD, he is deemed unable to pay his debts and has no reasonable prospect of being able to pay his debts by virtue of s.6A(1)(a) and (2)(a) of the BO.

16.  The only issue is whether the Debtor has made an offer to secure the Debt and the Petitioner’s refusal of the offer is unreasonable, and for this purpose, the court may take into account the contingent and prospective liabilities of the Debtor (s.6D(3) of the BO). 

17.  Section 6D(3) of the BO provides as follows:

“The court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied -

(a) that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented;

(b) that the acceptance of that offer would have required the dismissal of the petition; and

(c) that the offer has been unreasonably refused,

and, in determining for the purposes of this subsection whether the debtor is able to pay all his debts, the court shall take into account his contingent and prospective liabilities”.

18.  The applicable principle has been stated in Re Lee Priscilla Hwang, §11, per Chung J[5], citing His Lordship’s judgment in Re Lam Kwok Hing Wilfred, HCB 3560/2003, 21 November 2003, §6:

“the following principles are undisputed:

(a) in determining whether a petitioner’s refusal of the debtor’s offer is unreasonable, the court has to be satisfied that no reasonable hypothetical creditor in the petitioner’s position, and in the light of the actual history, would have refused the offer: Re a debtor (No. 32 of 1993) [1995] 1 ALL ER 628, 639d-f and 640a-b;

(b) the position should be considered only as between the petitioner and the debtor without regard to the position of other possible creditors or the impact on the entire body of creditors: Re a debtor (No. 32 of 1993), p. 640g;

(c) in considering the debtor’s offer, the petitioner is entitled to have regard to his own interests and is not required to balance his interests against those of the debtor, or to take a chance, or to show patience or generosity, even though some creditors might do so. Acting reasonably is not the same as acting justly, fairly or kindly: IRC v. a Debtor [1995] BCC 971, 974B-F;

(d) if a debtor wishes his proposals to be looked at with sympathy, it is incumbent on him to be full, frank and open with the petitioner in respect of his statements of his position: Re a debtor (No. 32 of 1993), p. 640a-c;

(e) in considering a debtor’s ability to repay the debt, no regard should be given to future contingencies such as profit or income from future contracts if he is permitted to carry on his business: Re: Phillip and Lion Far East Ltd, CWU No. 130 of 1991 (17 May 1991); Re: Lam Ngai Fung Tony, HCB No. 4641 of 2001 (3 December 2001);

(f) future income may be relevant only as part of the total circumstances to be considered regarding whether a debtor's offer to secure or compound for a debt has been unreasonably refused by the petitioner: Re: Lam Ngai Fung Tony.”

19.  In my judgment, the Debtor fails to show that he has made an offer to secure the Debt or that his offer (if made) has been reasonably refused by the Petitioner. 

20.  First, the Debtor has not shown that he has made an “offer” to secure the Debt:

(1)     In Wong 1^st, the Debtor relies on a series of letters issued by LCK to the solicitors for the Petitioner and Pan, which include the letters dated 3 April 2025, 21 August 2025, 22 August 2025, 15 September 2025 and 2 January 2026.  The proposals contained in the letters kept changing.  Neither Wong 1^st nor Mr Yau’s skeleton makes clear which “offer” the Debtor relies on for the purpose of s.6D(3) of the BO. 

(2)     After the 4 weeks’ adjournment, the only step taken by the Debtor is to cause an “open letter” to be sent by LCK to the solicitors for the Petitioner and Pan, this time offering to execute a document whereby the Debtor “agrees to assign HK$4,000,000 and HK$2,600,000 out of his share of entitlement to [sic] the net proceeds of NHEL’s liquidation as shareholder of HCL”, which he will execute on the day of the hearing and will be delivered to the Petitioner and Pan “if they agree with the arrangement”.  In return for the Debtor’s acts, the Petitioner and Pan should undertake to (a) repay any surplus to the Debtor; (b) allow the Committee to pay the balance to the Debtor after paying HK$6,600,000; (c) procure the dismissal of the Petition; and (d) withhold any proceedings in reliance on the statutory demand issued by Pan.   

(3)     It is clear from the latest “open letter” that no offer has in fact been made by the Debtor.  At best, the letter is an indication that the Debtor intends to execute a document stating that he agrees to assign HK$4,000,000 and HK$2,600,000 to the Petitioner and Pan.  A statement of the Debtor’s intention does not constitute an offer.  It is also incapable of acceptance by the Petitioner and Pan as it is conditional upon the Petitioner and Pan (a) agreeing with the Debtor’s proposed arrangement and (b) giving the 4 undertakings set out in the letter. 

21.  As no offer has been made by the Debtor, there is no basis for the Debtor to contend that his “offer” has been unreasonably refused by the Petitioner. 

22.  Second, even if, contrary to my view, the latest “open offer” constitutes an “offer” to secure the Debt, the proposed security is premised on an assumption that the Debtor is entitled to receive RMB 8,551,542.07 from HCL, but it has not been shown that the Debtor is entitled to receive such sum from HCL given that:

(1)     The Net Balance (RMB 21,378,855.18) needs to be applied to pay Yibao’s claim (RMB 1,016,184.75 plus interest) and any  further costs of the Committee, filing fee and deregistration fee.

(2)     Assuming the amount payable to HCL is RMB 20 million, the fund has to be applied by HCL to discharge its liabilities which include at least the HK$9 million due to HEL[6]. I say at least because according to the Petitioner, there are other expenses payable by HCL including the legal fee for legal proceedings against the Debtor, directors’ fees and expenses payable to the Petitioner and Pan and other “hidden liabilities and payable” which the Petitioner is not able to quantify as HCL (whilst under the management of the Debtor) did not prepared any audited accounts, and it needs to prepare its accounts to ascertain the financial position.  I have not taken into account these expenses as it is not by means clear that HCL is liable to pay such fees and expenses. 

(3)     After discharging HCL’s liabilities, the surplus available for distribution to the shareholders will be around RMB 12 million. Assuming the Debtor is entitled to receive 40% thereof, only RMB 4,800,000 will be distributed to him, which is considerably less than the HK$6,600,000 the Debtor intends to “agree to assign” to the Petitioner and Pan.

23.  Third, according to the Debtor’s own evidence and assuming the costs payable to the Petitioner for UP Proceedings are the same as the taxed costs payable to Pan, his present liabilities, exclusive of interest, already come to HK$6,854,842 (see §9(16) above).  This has not taken into account any contingent or prospective liabilities which the Debtor may have including any claim which HCL or NHEL may claim against him for breach of fiduciary duties in causing NHEL to be liquidated.  

24.  Fourth, it cannot be said that the Petitioner’s refusal to accept the Debtor’s “offer” is unreasonable, having regard to the following facts and matters:

(1)     The Net Balance is in RMB and cannot be remitted to any bank accounts of HCL or the Petitioner in Hong Kong.

(2)     There is no certainty as to when the Committee will be able to discharge NHEL’s liabilities, complete the deregistration, cancel the FDI status and make distribution to HCL.  Even after the Committee makes distribution to HCL, there is no certainty as to when HCL can complete preparation of its audited financial statements, which is necessary for the directors to decide whether a distribution can be made to the shareholders (i.e. the Debtor, the Petitioner and Pan). 

(3)     The Debtor has not made full and frank disclosure of his financial position, despite repeated requests made by the Petitioner. 

25.  In my view, a reasonable hypothetical creditor in the same position as the Petitioner would be entitled to refuse to accept an “offer” plagued with so many uncertainties.    

26.  For completeness, I note that the Debtor has in his affirmation mentioned the office unit owned by HEL and HIL and his shareholdings in these companies (§9(17) above). The Debtor has not made any “offer” in respect of his interests in either companies and no argument has been advanced by Mr Yau in respect of such interests. In any event, there is no  evidence regarding the current financial position of HEL and HIL. 

27.  For the above reasons, I reject the ground raised by the Debtor in opposition to the Petition.