RE ZHONG QUAN CHEUK KEI ENGINEERING CO. LTD.

HCCW 851/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 851 OF 2002

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J U D G M E N T

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1. This is a petition to wind up the Company presented by Joinwell Enterprises Ltd on the ground that the Company is unable to pay its debts. The debt in the petition for hire charge and labour charge is not in dispute. It amounted to HK$1,027,037.35. Invoices for this were issued between March to May 2002. On 23 May 2002, the petitioner served a statutory demand for the debt on the Company. The petition herein was filed on 1 August 2002.

2. The matter first came before me on 11 November 2002. It was twice adjourned to give the Company an opportunity to reach agreement with the petitioner and other creditors. I understand a meeting of the creditors was held on 26 November 2002 for considering the latest proposal put forward by the Company, to settle its debts in anticipation of the release of a performance bond in the sum of $8.6 million within one or two months or the recovery of damages by the Company in arbitration proceedings between the Company and the main contractor in the construction project at Tai Uk Wai, Tsuen Wan. It would appear that the Company had only served its defence and counterclaim in the arbitration proceedings on 29 November 2002, so it would be a long time before there would be any resolution in the arbitration proceedings with the principal contractor.

3. As for the performance bond expected to be released in the sum of HK$8.6 million, this amount is insufficient to settle the debts admitted by the Company which is in the total sum of HK$10.6 million. I have not included the debt owed to Mr Cheuk King in the sum of about HK$6 million which is disputed by the Company.

4. Mr Cheuk King has appeared on this petition supporting the petition. Two creditors, being Well Glory Building Materials Company Ltd and Well Joint Trading Ltd who are owed a total sum of about HK$5 million, have opposed the petition on the ground that it is expected that the sum of HK$8.6 million would soon be released on the performance bond.

5. The decision in this case is whether to make a winding-up order or leaving the Company free to carry on its business. The alternative of a voluntary winding-up is not open here. As the debt is not in dispute, the petitioner is prima facie entitled to a winding-up order. I see no reason in this instance not to grant this class remedy to the petitioner. The Company has had ample chance, in my view, to try to reach a settlement with its creditors and that was unsuccessful.

6. I therefore make a winding-up order against the Company and I order that the petitioner's costs are to be paid out of the Company's assets.