RE Y.K. ENGINEERING & PILING LTD

HCCW 674/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 674 OF 2004

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J U D G M E N T

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1.  This is a petition to wind up YK Engineering & Piling Limited (“the Company”) presented by Lo Kam Keung trading as Yick Shing Metal Works.  The petition is founded on a judgment debt of HK$1,305,269.00 in HCA No. 801 of 2002 dated 23 March 2004.  A demand for the judgment debt was served on the Company on 21 April 2004.  There is a supporting creditor in this petition, namely, Henney Company.  Other than that, no creditor has given notice of intention to appear in this petition.

2.  At the first hearing of the petition in July 2004, a certified public accountant, Yiu Cho Yan, appeared before the master as the liquidator of the Company appointed at a creditors’ meeting held on 6 July 2004.  Mr Yiu subsequently issued a summons on 10 August 2004 for dismissal of the petition.  However, in his second affidavit filed on 17 September 2004, he informed the court that as the liquidator he should take a neutral stance in these proceedings and he would not be pursuing the summons issued for dismissal of the petition. 

3.  Much evidence has been filed in these proceedings by the petitioner, the supporting creditor Henney Company, Mr Yiu, a director of the Company Ma King Chiu and HD Engineering Limited, which was one of the creditors that had attended the creditors’ meeting on 6 July 2004.  These affidavits are to address the issues whether Mr Yiu has been validly appointed the liquidator of the Company at the creditors’ meeting on 6 July 2004, and whether Mr Yiu is independent of the directors of the Company and has been acting impartially.  It seems to me after reading the evidence filed that there is no need to go into the issues whether Mr Yiu has been validly appointed or whether there was any irregularity in the way that the votes were cast in the resolution to appoint him.  As I have pointed out to the petitioner and counsel appealing for Mr Yiu, there are material irregularities in the procedures adopted for the creditors’ voluntary liquidation purportedly commenced under section 228(1)(c) of the Companies Ordinance, Cap. 32.  Under this provision, a company may resolve by special resolution that it cannot by reason of its liabilities continue business and that it would advisable to wind up the company.

4.  The petition herein was presented on 8 June 2004.  Some time in June 2004 but after the service of the winding-up petition on the Company, Mr Yiu was approached by a director of the Company, Mr Ma, and informed that it was the intention of the Company to go into voluntary liquidation.

5.  On 18 June 2004, Mr Yiu sent out notices to a list of creditors provided by Mr Ma on 15 June 2004, notifying these creditors to attend a creditors’ meeting on 6 July 2004 to consider a resolution to appoint him as the liquidator.   

6.  As the Company had sought to use the procedure in section 228(1)(c) to go into creditors’ voluntary liquidation, not less than 21 days’ notice would have to be given to the members of the Company for a special resolution to be passed to wind up the Company at a general meeting.  There is no information on the evidence filed as to when the notice for the extraordinary general meeting was given to the members of the Company.

7.  If the notice for the extraordinary general meeting was served on 18 June 2004 at the same time as the notice was sent out to creditors for the creditors’ meeting, this would be less than 21 days from 6 July 2004, which was the day when the general meeting was held immediately before the creditors’ meeting.  There was no resolution signed by all the members of the Company giving consent to a shorter period of notice.

8.  If the notice for the extraordinary general meeting had been served before 18 June 2004 and was given not less than 21 days before 6 July 2004, this would not be in compliance with section 241(1), which provides that the notice of creditors’ meeting should be sent by post to creditors “simultaneously with the sending of the notices of the [general] meeting of the company”. 

9.  Furthermore, there were at least 15 creditors who did not receive notice of the creditors’ meeting sent to them by post, whether simultaneously with the sending of the notices of the general meeting of the Company, as required by section 241(1) or at all.  Although there is evidence from Mr Ma that of these 15 creditors who are the employees of the Company, ten of them were reached by telephone the day before the creditors’ meeting and had indicated that they did not wish to attend, this mode of giving notice to the creditors of the creditors’ meeting verbally and on the day before the creditors’ meeting was not in compliance with section 241(1).

10.  As there were material irregularities on the procedure adopted by the Company in the creditors’ voluntary liquidation purportedly commenced under section 228(1)(c), the voluntary liquidation commenced by the Company is invalid and cannot constitute a ground for opposing the winding-up order sought by the petitioner. 

11.  In the circumstances, I make an order to wind up the Company.  The petitioners’ costs and the costs of the supporting creditor Henney Company would be paid out of the assets of the Company.