RE BONDWAY (ASIA) CO. LTD.

HCCW 360/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 360 OF 2002

____________

____________

_______________

J U D G M E N T

_______________

1. This petition to wind up the company is brought by Dao Corning Corporation trading as Dao Corning Asia, on the ground that the company is unable to pay its debts. The debt in the petition is in the sum of HK$13,331,226.90, being the price of goods sold and delivered by the petitioner to the company in the supply of architectural sealant products. The invoices for the products were issued from September 2001 to December 2001.

2. A statutory demand was served by leaving it at the registered office of the company on 1 March 2002 and the petition was presented on 3 April 2002. The debt in the petition is not in dispute. It is also not in dispute that the company is not able to pay the petitioner's debt unless further time be given by the petitioner. That is something the petitioner is unwilling to do.

3. I should also mention that the petitioner is the largest creditor of the company. I have been taken to the audited accounts of the company for the year ended 31 March 2002. In that report the auditors expressed a qualified opinion as the accounts have been prepared on a going concern basis. In the opinion of the auditors, the preparation of the company's account on that basis is inappropriate. The company cannot be considered to be a going concern because the directors could not reach an agreement with its major supplier, namely, the petitioner, to settle the company's liabilities and the petitioner has stopped supplying goods to the company. This has a serious consequence on the company's business. According to the balance sheet, the net current liabilities of the company stood at approximately HK$5,400,000.00.

4. The company has asked the court not to exercise its discretion to make a winding-up order on the ground that a former director of the company has set up a new business to compete with the company and that the petitioner has supported this former director by appointing his company a distributor of the petitioner's products. It is submitted on behalf of the company that it was unethical for the petitioner to support the former director to compete with the company and at the same time pressing the company for immediate payment of its debt of HK$13,000,000.00.

5. In my view, this is not a sufficient basis to ask the court not to make a winding-up order. There being no dispute of the debt in the petition and the company is plainly unable to pay its debts, the petitioner is entitled ex debito justitiae to a winding-up order. I therefore make a winding-up order against the company and order that the petitioner's costs be paid out of the company's assets.