RE RICHLINK ASIA LTD

HCCW 31/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 31 OF 2003

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(Heard Together)

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J U D G M E N T

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1. The three petitions before me have been ordered to be heard together.

2. These petitions were all presented on 8 January 2003 by the Hong Kong and Shanghai Banking Corporation and provisional liquidators were appointed for the three companies on 10 January 2003. Gold Wo International Holdings Ltd ("Gold Wo International") was incorporated in Bermuda and registered under Part XI of the Companies Ordinance, Cap. 32 with its principal place of business in Hong Kong. The shares of Gold Wo International were listed on The Stock Exchange of Hong Kong Limited since April 2001. Gold Wo Melamine Product Company Limited ("Gold Wo Melamine") and Richlink Asia Limited ("Richlink") are beneficially owned by Gold Wo International. These two are companies incorporated in Hong Kong.

3. The petitioner had granted banking facilities to Gold Wo Melamine and Richlink (the companies being the subject of HCCW No. 31 of 2003 and HCCW No. 32 of 2003) by a facility letter dated 10 July 2001. In consideration thereof, Gold Wo Melamine and Richlink entered into all-monies guarantees on 4 October 2001 in favour of the petitioner whereby each guaranteed the other's indebtedness under the banking facilities. Gold Wo International (being the subject of HCCW No. 33 of 2003) also joined as a guarantor in favour of the petitioner in respect of all monies owed by each of Gold Wo Melamine and Richlink to the petitioner.

4. Trading in the shares of Gold Wo International was suspended on 16 December 2002. On 17 December 2002, the investigation of the ICAC of the management of the Gold Wo Group for fraudulent accounting was made public. The petitioner froze all the accounts of Gold Wo Melamine and Richlink the same day.

5. As at 18 December 2002, the amount owed to the petitioner in respect of facilities was HK$13 million odd.

6. A demand for the indebtedness was served on each of the three companies on 19 and 20 December 2002. The petitions were presented on 8 January 2003 and provisional liquidators were sought to protect the assets of the Gold Wo Group and to facilitate a rescue package by a sale of the listed status of Gold Wo International.

7. Since the petitions first came before this court in March 2003, a number of adjournments were sought and granted, for the provisional liquidators to attempt to bring about a restructuring of the Gold Wo Group. In October 2003, a restructuring agreement was entered into by the provisional liquidators with an investor and in March 2003, a joint submission of the resumption proposal was made by the provisional liquidators and the investor to the Stock Exchange. However, the resumption proposal was rejected and despite subsequent correspondence, the Stock Exchange has maintained its position and exercised its discretion to impose additional conditions for the resumption of trading.

8. On 15 May 2004, the investor exercised its right to terminate the restructuring agreement by the long stop date in that agreement and the agreement was terminated.

9. The Company will be de-listed if no valid resumption proposal is submitted by 10 September 2004.

10. As the possibility of restructuring would appear fairly remote, the petitioner has not sought any further adjournment on this occasion and seeks a winding-up order against all three companies. All the other bank creditors have indicated support for this course.

11. In HCCW No. 31 of 2003, one creditor has given notice of intention to appear and to oppose. This is Guangdong Keen Lloyd Holdings Limited ("Guangdong Keen Lloyd") with a claim of RMB 204 million.

12. In HCCW No. 32 of 2003, one creditor has given notice of intention to appear and to oppose. This is Guangdong Winko Investment Limited, formerly known as Guangzhou Winko Trading Company Limited ("Guangdong Winko"), with a claim of RMB 200,000.

13. In HCCW No. 33 of 2003, six creditors have given notice of intention to appear and to oppose. They include Guangdong Keen Lloyd and Guangdong Winko. The others are the former management or person connected with the former management.

14. Guangdong Keen Lloyd and Guangdong Winko oppose the petitions because their related company, Winko Foundation Limited ("Winko Foundation"), has provided a revised rescue proposal to the provisional liquidators somewhat belatedly. These opposing creditors support the revised proposal as they believe the proposal can minimise the loss for the unsecured creditors. No evidence has been filed by these opposing creditors as to what the initial proposal was or the terms of the revised proposal.

15. I am given to understand by Mr Douglas Lam who appeared for the petitioner that the revised proposal of Winko Foundation was received by the provisional liquidators in the afternoon of 12 June 2004. The provisional liquidators have considered the revised proposal and have rejected this. This is also the stance of the petitioner and the other bank creditors who seek a winding-up order today.

16. As for the earlier proposal of Winko Foundation, this had been considered by the provisional liquidators last year and they took the view that the proposal would not give satisfactory return to the unsecured creditors and did not recommend acceptance.

17. In the circumstances, I have no difficulty in coming to the view that there is no viable restructuring proposal before this court, let alone in-principle support for the revised proposal from the required statutory majority of creditors. I see no point in granting any further adjournment as sought by the opposing creditors. I therefore make a winding-up order in respect of each of the three companies. The petitioner's costs in each of the petitions would be paid out of the assets of the company concerned.