RE ICG ASIA FINANCE LTD

HCCW 209/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO 209 of 2015

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D E C I S I O N

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1.  I have before me a winding-up petition issued on 25 June 2015 seeking a winding-up order on the grounds of insolvency against the Company which is a finance company. The debt relied on by the Petitioner is in the sum of HK$10,699,610 which arises pursuant to a partial judgment in HCA 992/2014 dated 15 May 2015.

2.  That judgment was obtained before Master Lai on a summary judgment application.  On 2 June 2015 a statutory demand was served. On 8 July 2015 an unsuccessful attempt was made to obtain an order staying enforcement of the judgment.  No further application has been made to a judge for a stay.

3.  On 20 July 2015 the Plaintiff obtained a mareva injunction which remains in place.  On 28 August 2015 the Company filed an affidavit of Mr Brian Nord exhibiting a 3^rd Affidavit in the High Court Action which the Company wishes to rely on in support of its appeal which is due to be heard on 27 October 2015.

4.  As I explained in paragraph 4 of my judgment in Shiamas International Limited,HCCW 80/2014, unreported, dated 3 September 2014, in the absence of a stay of judgment, a winding-up petition will only itself be stayed pending appeal if the Company is able to demonstrate very strong prospects of success. 

5.  The evidence that has been filed by the Company does not seem to me to satisfy this requirement.  The evidence itself is fairly vague and reading what is on the court file it is very difficult for me to assess the impact of the new defence, which is an alleged contractual right of set‑off in respect of a loan made by the Company to the Plaintiff.  Also because the evidence was filed considerably later than should have been filed, it has not been possible for the Petitioner to file any evidence explaining the background of the High Court Action claim, and dealing with what is on the Company’s own admission a new defence, that was not advanced before the Master.

6.  As I have said on previous occasions, I expect all company directors to recognise that there are few more important events in the life of a company than the presentation of a winding-up petition, and I would expect a winding-up petition to be taken seriously, lawyers to be instructed promptly, for them to explain to their client that it is necessary for the company to file evidence in opposition to any petition they think should be opposed within the time period provided in the Winding Up Rules, which is within seven days of filing of evidence confirming the contents of the petition.

7.  It is necessary, and of course desirable, that at the first hearing of any winding-up petition before the court, the court is able to assess properly whether or not a petition should be granted or perhaps that the issues that it gives rise to, or perhaps more accurately a company’s alleged defence gives rise to, require more detailed consideration than the normal Monday morning list allows and adjourn matter for more thorough consideration. Similarly if it is suggested that in the present case, the winding-up proceedings should be stayed pending the determination of an appeal, it is important that a company ensures that it files evidence in plenty of time, and in particular sufficient time for the petitioner to be able to respond and for the Companies Court to be able to make an assessment on a Monday morning whether it appears at least arguable that the grounds of appeal have a very strong prospect of success.  This has clearly not happened in the present case.  The fact that mareva injunction judgment remains in place, no attempt has been made it would appear by the Company to compromise it, calls into question its ability to pay the judgment and necessarily calls into question its solvency. 

8.  In the circumstances I will make the normal winding-up order.