RE HNA GROUP (INTERNATIONAL) COMPANY LTD (formerly known as HNA GROUP (HONG KONG) HOLDING CO LTD and HNA GROUP INTERNATIONAL HEADQUARTER (HONG KONG) CO LTD

HCCW 250/2024

[2025] HKCFI 811

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 250 OF 2024

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REASONS FOR JUDGMENT

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1.  At the hearing of the petition presented by the petitioner, Ashurst Hong Kong (“Petitioner”), against HNA Group (International)  Company Limited (海航集團(國際)有限公司)[1] (“Company”)  on 26 April 2024 (as amended on 5 December 2024)  (“Petition”), I made a usual winding-up order against the Company. These are the reasons for my judgment.

2.  The Company was incorporated on 12 July 2010 as a public company limited by shares under the former Companies Ordinance (Cap. 32).  The Company’s paid-up capital as at 30 June 2023 was HK$21,606,011,408. 

3.  The petitioning debts arose in this way. 

4.  By an engagement letter dated 26 April 2021, the Company agreed to engage the Petitioner to provide legal services in connection with HCA 488/2021 (“Engagement Letter”).  The Engagement Letter provides inter alia that payment to the Petitioner is due within 10 days of the date of the invoice issued and “time will be of the essence for payment of these invoices”.   

5.  Pursuant to the Engagement Letter, the Petitioner issued and delivered various invoices to the Company in respect of the legal services rendered. The Company paid the fees in full up to the invoice dated 29 September 2022 and partly settled the fees payable under the invoice dated 31 October 2022.  Since then, the Company has failed to pay any of the fees and disbursements for the work carried out by the Petitioner in respect of HCA 488/2021 and the related arbitral proceedings. 

6.  By 29 May 2023, the total outstanding fees payable under the 8 invoices issued by the Petitioner was US$207,227.29.  On 10 July 2023, the Petitioner obtained an order permitting it to cease to act for the Company with costs assessed at HK$1,040.  I shall refer these 2 sums payable by the Company to the Petitioner as the “Debts”.

7.  By letter dated 13 September 2023, the Petitioner demanded the Company to pay the Debts.  This was followed by the statutory demand served on the Company on 27 September 2023 requiring it to pay the Debts within 21 days thereof (“SD”).  No payment has been made by the Company. 

8.  The Petition was presented on 26 April 2024.  The affidavit verifying the Petition was filed on the same day.  By virtue of rule 32 of the Companies (Winding-up)  Rules (Cap. 32H)  (“CWUR”), the Company was required to file its affidavit in opposition by 8 May 2024. 

9.  On 19 July 2024, Mr Zhang Rui Kang, who claims to be a creditor of the Company for the sum of US$48,100,000, filed a notice of intention to appear in and support the Petition (“Supporting Creditor”).

10.  As the Company has failed to comply with the SD, it is deemed insolvent by virtue of s.178(1)(a)  of the Companies (Winding up and Miscellaneous Provisions)  Ordinance (Cap. 32)  (“CWUMPO”).  The burden is on the Company to satisfy the court that there is a bona fide dispute on substantial grounds in respect of the Debts or if it does not dispute the Debts, it has the financial means to pay the Debts.  Neither has been done by the Company.  The Company has not filed any evidence in opposition to the Petition.  Nor has it filed any evidence to dispute the debt claimed by the Supporting Creditor. 

11.  The only reason why no winding-up order has been made against the Company was that unbeknownst to the Petitioner, on 17 April 2024 (i.e. 9 days before the Petition was presented), Golden Morning Hong Kong Limited (“GM”)  had presented a winding-up petition against the Company in HCCW 225/2024 (“GM Petition”).  In the GM Petition, reliance was placed on the Company’s failure to comply with a statutory demand served upon it on 14 March 2024 requiring the Company to pay US$1,067,272.32.  The debt represented the outstanding legal fees due and payable to Messrs. Kobre & Kim LLP under 8 invoices issued between 24 March and 18 September 2023, which was subsequently assigned to GM on 1 March 2024.  GM was represented by Messrs. KB Chau & Co. in HCCW 225/2024.   

12.  The GM Petition was adjourned by a Master to be heard before Ng J on 21 October 2024. Upon the joint application made by GM and the Company, the hearing was vacated and adjourned for arguments with one day reserved, which is scheduled to be heard on 14 May 2025 before Anthony Chan J. 

13.  At the first Monday hearing of the Petition on 27 January 2025, Mr Thomas Wong, counsel for the Petitioner, urged the court to make an immediate winding-up order against the Company for the following reasons:

(1)  The Company had not filed any evidence in opposition and, therefore, the Debts were undisputed. 

(2)  While there are authorities to say that absent exceptional circumstances, a creditor should not issue a petition if the company had already been subject to an earlier petition, and  the court would generally either dismiss the later petition or order the later petition to be removed from the court file (Re Grand Peace Group Holdings Ltd [2021] HKCFI 1142 §§2-8 (Harris J); Re China Greenfresh Group Co Ltd [2021] 3 HKC 1 §§3-7 (Harris J)), the court plainly has jurisdiction to make a winding-up order against the Company in these proceedings. 

(3)  The law does not prohibit a second petition.  A second petition should not be regarded as an abuse of process merely because it was a second petition (Re Perak Pioneer Ltd and Plessey Investments Ltd [1985] HKLR 448 at 450E (Kempster JA), 455F-456A (Fuad JA)  and 456C (Cons JA)).

(4)  Even according to Grand Peace and China Greenfresh, a second petition may be presented and prosecuted in “exceptional circumstances” (which exist in the present case).

(5)  The Petition was unopposed, while the GM Petition was contested and had been adjourned to 14 May 2025 for substantive arguments. 

(6)  In these circumstances, the proper and cost-effective course would be for the court to make a winding-up order in the present proceedings (and then consequentially vacate the hearing of the GM Petition)  – rather than for the Petitioner to wait several months for the outcome of the contested GM Petition.

(7)  At the callover hearings on 3 July 2024 and on 14 August 2024, both Master Hui and Master Jack Wong observed that since the Petition is uncontested, the Petitioner could potentially “overtake” the GM Petition and press for a winding-up order after all the procedural steps are satisfied.

(8)  If the court were not minded to make an immediate winding-up order, the Petitioner would ask for a 2-weeks’ adjournment so that it could liaise with GM with a view to procuring either the dismissal of the GM Petition or substitution of the Petitioner as petitioner in HCCW 225/2024.

14.  In my judgment, the approach of the court in dealing with a subsequent winding-up petition presented by a creditor against a company which has already been subject to an earlier petition is that described by Harris J in China Greenfresh and Grand Peace. 

(1)  The approach represents the settled practice of the Companies Court in dealing with subsequent or multiple winding-up petitions presented by creditors against the same company, which is based on and reflects the nature of winding-up proceedings being a class remedy and all creditors have the right to participate in the existing winding-up proceedings by filing a notice of intention to appear in the petition in accordance with rule 30 of the CWUR. 

(2)  Aside from the procedural considerations described by Harris J, it would generally be in the interests of the creditors for the court to make a winding up order in the first petition so that the date of the commencement of the winding up of the company would be an earlier date.  This is because all the avoidance provisions under the CWUMPO, which are designed to preserve and recover the assets of the company so as to achieve a pari passu distribution amongst its creditors, refer to the date of the commencement of the winding up of the company. 

15.  In each of China Greenfresh and Grand Peace, the court was dealing with a subsequent petition presented by a creditor against the company in circumstances where (1)  the creditor was aware of the existence of the earlier petition but chose to present its own petition, and (2)  the earlier petition were already in an advanced stage and would be heard by the court much earlier than the subsequent petition.  It was in such circumstances that Harris J considered that it was appropriate to adjourn the petition (in China Greenfresh)  for further consideration of the form of order to be made in terminating the subsequent petitions which were found to be unnecessary, or to dismiss the petition (in Grand Peace)  after having considered the form of order to be made. 

16.  Neither consideration is present in the present case.  It is not in dispute that the Petitioner was not aware of the GM Petition at the time the Petition was presented.  The difference in the dates between the GM Petition and the Petition is immaterial and would not make much difference  when it comes to invoking the avoidance provisions under the CWUMPO for the purpose of recovery of assets.

17.  On the other hand, it must be in the interests of the creditors as a whole to have the Company be wound up immediately so as to bring into operation the statutory scheme of winding up without any further delay, and the time and costs which would otherwise be incurred by the Company in opposing  the GM Petition would also be saved. 

18.  GM was notified of the existence of the Petition and the intention of this Court to make a winding-up order against the Company in these proceedings by letters dated 24 January 2025 and 14 February 2025 and its right to make any submissions it considered appropriate. No submission has been made by GM.