RE KWONG WING & CO (CHINA) LTD

HCCW 61/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING‑UP PROCEEDINGS NO 61 OF 2017

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING‑UP PROCEEDINGS NO 62 OF 2017

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(HEARD TOGETHER)

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D E C I S I O N

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1.  I have before me two associated petitions issued by Shanghai Commercial Bank Limited (“the Bank”) for the winding up of Kwong Wing & Co (China) Limited and Kingsway Int’l (HK) Corporation Limited on the grounds of insolvency. In both cases the Bank has served a statutory demand. The statutory demands make reference to debts arising from judgments entered summarily in two High Court Actions. In both cases the underlying debts arise under guarantees given by the Companies in respect of loans made by the Bank in connection with the operations of associated companies of the respondents which have been operating a hotel.

2.  The two summary judgment orders are under appeal, but no stay has been granted or applied for.  The amounts of the debts are substantial. It is, however, suggested by the Companies that regardless of the outcome of any appeal, the hotel building owned by associated companies is in the process of being sold and will produce sufficient proceeds in order to repay the Bank. 

3.  The Bank has in fact commenced a mortgage action under mortgages granted to other companies in respect of loans to them secured on the hotel building.  Those actions are currently being opposed.  It is for that reason as I understand it that the Bank took the decision to issue the petitions.

4.  As I have already indicated, the Companies are  asking for the petitions to be adjourned in order to give them the opportunity to finalise discussions currently underway with a prospective purchaser of the hotel who has also indicated informally I am told, that it may be willing to advance a loan out of which the sums claimed could be repaid. 

5.  As is clear from the fact that the Bank has rejected the request to agree to an adjournment of the petitions, the Bank takes the view that it is in its own commercial interests that the Companies are wound up and liquidators are appointed in order to take action which would result in recoveries of sums which will improve its prospects of recovering the underlying loans that it has made and which are guaranteed by the two Companies.

6.  In my view, and it seems to me that this is generally the position, where a petitioner is entitled to a winding-up order ex debito justitiae, it is for the petitioner in the absence of sensible opposition from other creditors to make what is essentially the commercial decision as to whether or not an immediate winding‑up order should be made or a petition adjourned to allow a company time to repay the debt.

7.  I have heard nothing and read nothing filed on behalf of the Companies to lead me to conclude that this is a case where the petitioner is not entitled to a winding‑up order.  I will therefore make the normal winding‑up orders in respect of both Companies.