PRIMETALS TECHNOLOGIES, LTD v. GREAT DYNASTY HK CO., LTD

HCCW 361/2025

[2025] HKCFI 5269

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 361 OF 2025

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BETWEEN

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REASONS FOR JUDGMENT

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1.  By Petition presented on 16 June 2025 the petitioner, Primetals Technologies, Limited (普銳特冶金技術有限公司) (“Petitioner”), seeks to wind up Great Dynasty HK Co., Limited (盛唐偉業有限公司) (“Company”) on the ground that it is insolvent and unable to pay its debts. At the hearing, I made a usual winding up order against the Company. These are the reasons for my judgment.

2.  The Company does not dispute the petitioning debt but seeks a further adjournment of the Petition for 6 months.

3.  The Company was incorporated under the former Companies Ordinance (Cap. 32) on 1 June 2010.

4.  By a CIETAC Beijing Award No. 1243 of 2023 dated 25 May 2023 (“Award”), the Company was ordered to pay to the Petitioner the following sums:

(1)  The sum of EUR 3,755,716;

(2)  The interest on EUR 3,755,716 from 8 April 2022 to the date of payment at the loan prime rate published by the National Interbank Funding Centre;

(3)  Legal fees for the arbitral proceedings in the sum of EUR 60,000; and

(4)  Costs of the arbitration in the sum of USD 66,500.

5.  On 17 July 2024, Mimmie Chan J granted leave to the Petitioner to enforce the Award as a judgment of the court (“Enforcement Order”)[1]. On 19 July 2024, the Enforcement Order was served on the Company[2]. No payment was made by the Company.

6.  In the statutory demand dated 10 October 2024 (“SD”) and served on the Company on the same day, the Company was required to pay HK$35,650,677, being the judgment debt under the Enforcement Order together with interest thereon from 8 April 2022 to 10 October 2024 in the amount of EUR 335,046 (“Debt”) within 21 days thereof.

7.  Following the Company’s failure to comply with the SD, the Petition was presented on 16 June 2025.

8.  In affirmation of Mr Jiang Sijun dated 26 August 2025 (“Jiang Aff”), the Company raises the following grounds in opposition to the Petition:

(1)  First, no particulars have been provided by the Petitioner in either the SD or the Petition as to how the Debt was arrived at, such that the SD is defective[3].

(2)  Second, there is a real prospect that the Company would be able to recover a debt of RMB 739,089,243.29 (“739m Debt”) owed by 2 companies in the Mainland[4]. In this regard, the Company points to the fact that:

(a)  These 2 companies are part of the restructuring proceedings in the Mainland involving 253 companies (“Restructuring Companies”)[5], and the administrator in charge of the restructuring confirmed that the Company was owed an unsecured debt in the amount of RMB 739,089,243.29[6].

(b)  On 6 May 2024, the Intermediate People’s Court in Shenyang City, Liaoning Province, approved a restructuring proposal (“Restructuring Plan”)[7], which states that (i) for general unsecured creditors, the estimated recovery rate in liquidation is 4.03%; (ii) in respect of each unsecured debt, an amount up to RMB 500,000 will be paid in cash by 2 instalments; (iii) the creditors holding the remaining claims will be entitled to share in 31% of the equity in a new company called “新 忠 旺 集 团” in proportion to their claims and will receive one share in the “Trust” (as defined in §(c) below) for each RMB 1 of their remaining claims.

(c)  On 12 June 2025, the creditors of the Restructuring Companies, including the Company, were notified that they would be repaid by shares in a trust (“Trust”), which holds equity in 3 companies (i.e. 辽宁忠旺精制投资有限公司, 辽阳忠旺精制铝业有限公司 and 辽阳峻力企业管理有限公司)[8]. The Company has been taking steps to register as a beneficiary of the Trust[9].

(3)  Third, the Company is able to pay its debt in that according to the audited financial statements of the Company for the year ended 31 December 2024 (“2024 AFS”), as at 31 December 2024, the Company had cash and cash equivalent in the amount of HK$27,906,308, which was “far more than sufficient to pay off its payables”[10].

9.  At the first hearing of the Petition on 1 September 2025, Harris J granted leave to the Company to file Jiang Aff out of time and adjourned the Petition for 8 weeks to see if the Company would be able to receive significant recovery from the 739m Debt as it claimed.

10.  At the hearing before this Court, the Company seeks a further adjournment of the Petition for 6 months based on the same grounds set out in Jiang Aff, with particular emphasis on the recovery under the Restructuring Plan.

11.  In support of its application for adjournment, the Company proposes to pay RMB 500,000 to the Petitioner upon receiving the same from the administrator, and to pay the balance of the Debt from the amount to be recovered under the Restructuring Plan[11].

12.  The Petitioner seeks an immediate winding up order against the Company.

13.  The principles are well-established[12]:

(1)  A creditor whose debt is not in dispute is entitled ex debito justitae to a winding up order against the company.

(2)  The court has a discretion to adjourn a petition if the company can provide convincing evidence that there is a reasonable prospect that the petitioning debt will be paid within a reasonable time.

(3)  This requires the company to put forward a repayment proposal which is both precise and credible. For this purpose, it is incumbent upon the company to adduce a reasonably precise timeline based on the repayment proposal and demonstrate to the court that the proposal would be more beneficial to the general creditors as a whole than an immediate winding up order.

14.  I do not think that the Company has shown any valid ground in opposition to the Petition or that there is any proper basis for the Court to further adjourn the Petition.

15.  First, there is no dispute that the Company is liable to pay the judgment debt under the Enforcement Order, together with interest accrued thereon until payment. The Company’s contention that the SD is “defective” for want of particulars or lack of explanation on how the Debt (HK$35,650,677) was arrived at is untenable. The SD referred to the judgment debt under the Enforcement Order and stated the amount of interest accrued on the judgment debt for the period from 8 April 2022 to 10 October 2024. No further particulars or explanation was required.

16.  Second, the evidence adduced by the Company does not show that there is a reasonable prospect that the Debt will be paid within a reasonable time:

(1)  The Company is only able to point to the Restructuring Plan which shows that a cash distribution of RMB 500,000 will be paid to each creditor.

(2)  Mr Leon Guo, counsel for the Company, submits that there is a real prospect of the Company recovering the 739m Debt, and the proceeds of such debt “are significantly more than the amount of the Debt claimed by the [Petitioner]”. Reliance is placed on the estimated recovery rate of 4.03% in liquidation as compared to the recovery under the Restructuring Plan.

(3)  However, as Mr Guo acknowledges, there is no indication in the Restructuring Plan as to when the Company will be able to receive any distribution beyond the RMB 500,000 cash payment. The absence of any timeline for recovery under the Restructuring Plan is compounded by the fact that the recovery will be in the form of equity in a new company (“新 忠 旺 集 团”) and a beneficial interest in the Trust. There is no evidence to show that these assets can be realised, let alone within a reasonable time.

(4)  More importantly, there is no reason to think that the Company, under the control of the liquidators, will not be able to receive any distribution to be made by the administrator under the Restructuring Plan. As a substantial creditor of the Company (no other creditor has entered appearance to support or oppose the Petition), the Petitioner is entitled to seek an immediate winding up order so that the Company will be placed under the control of the liquidators, and for the liquidators to take charge of any recovery payable to the Company under the Restructuring Plan.

17.  Third, the evidence before the Court shows that the Company is clearly insolvent:

(1)  The Company has failed to comply with SD and is deemed insolvent by virtue of s.178(1)(a) of the Companies (Winding up and Miscellaneous Provisions) Ordinance (Cap. 32).

(2)  Mr Guo’s reliance on the 2024 AFS does not assist the Company. There is no evidence to show that the cash recorded in the 2024 AFS is still available to the use of the Company. Note 11 to 2014 AFS described the HK$27,906,308 as cash in hand and bank balance. The Company has not explained what had happened to these cash and cash equivalent, and why they were not applied to repay the Debt.

18.  As a judgment creditor, the Petitioner is entitled to seek a winding-up order against the Company. The Company has not discharged the burden of showing that there is any valid ground to oppose the Petition or that there is any useful purpose for the court to grant a further adjournment of the Petition.