Re Aquality Engineering Co. Ltd.

HCCW1023/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO. 1023 OF 2001

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J U D G M E N T

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1. This is a petition for the winding-up of a company by the name of Aquality Engineering Company Limited.

2. Apparently this Company owes something like HK$18.5 million to the Standard Chartered Bank which on 8 September 2001 presented a statutory demand against the Company. That demand was not satisfied and on 10 September 2001, the bank presented the present petition against the Company. On the same day that the petition was presented, an application was made by the petitioner for the appointment of provisional liquidators and by an order of Deputy High Court Judge To, provisional liquidators were appointed on 10 September 2001.

3. The principal assets of the Company comprised two maintenance contracts with the Government. When the matter was first brought to the court, it was the evidence of the petitioner that should these maintenance contracts lapse, the Company would suffer greater liabilities due to Government claims against the Company for breach of these maintenance contracts. It would appear that the Company had ceased business shortly before the presentation of the petition, and the managing director had told the employees that the Company was insolvent and would have to cease business.

4. Since the appointment of the provisional liquidators, they have taken steps to effect a novation of the maintenance contracts, whereby a sub-contractor would step into the Company's shoes in relation to the maintenance contracts with the Government so that in effect, the Government would suffer no loss and the Company therefore would not have its liabilities added to by claims from Government for breach of these maintenance contracts.

5. A number of adjournments were given by this court to allow time for the sub-contractor and Government to effect the relevant documentation to bring about the novation. The novation has now been completed. There are no supporting or opposing creditors and there is now no further reason why the winding-up needs to be adjourned. There are no grounds that I can see for the winding-up not to be proceeded with when the Company is obviously insolvent, and therefore, I would make the usual winding-up order.