RE TING TIN SANG

HCBI 516/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS

INTERIM ORDER APPLICATION NO. 516 OF 2004

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DECISION

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1. The nominee of the debtor under the Individual Voluntary Arrangement (IVA) approved by the court pursuant to section 20 of the Bankruptcy Ordinance Cap.6 (the Ordinance) applied to this court for leave to withdraw the Certificate of Default and the Final Report both filed on 13 February 2006 in accordance with the term of the Proposal terminating the IVA. The Certificate of Default was filed because the debtor had failed to make the 17^th contribution in December 2005 in compliance with the Proposal under the IVA. The effect of this application, if successful, is to revive the IVA.

2. The application was first heard by me on 21 April 2006 and was adjourned because the nominee had not given notice of the hearing to the Official Receiver. One of the creditors Standard Chartered Bank (Hong Kong) Limited holding 14.34% voting power refused to consent to the application. I adjourned the hearing for the nominee to give due notice to all the creditors and the Official Receiver. This is also for the purposes of getting the consent of all the creditors and the Official Receiver and for this court to consider whether it has the jurisdiction to make the order as requested. I gave leave to the nominee to file and serve further affidavit for his application. I also requested the solicitor for the nominee to make some research on the jurisdiction point.

3. The matter comes back to me today. The nominee has filed his further affidavit confirming that the only creditor who has refused to consent to the withdrawal application has now agreed. In other words, all creditors have consented to the nominee’s application to withdraw his Certificate of Default and Final Report. Notice has been given to the Official Receiver. The Official Receiver has raised no objection to this application. Miss Wong, the solicitor acting for the nominee submits that she has made some research on the jurisdiction issue, but is unable to render any assistance to this court. She relies upon the inherent jurisdiction of this court to consider granting the order requested.

4. The main concern for this court is whether I have the jurisdiction to make the order as applied for by the nominee. The primary issue is that the IVA has been terminated by the filing of the Certificate of Default by the nominee in accordance with the Proposal and I have to consider if this court has the jurisdiction to allow the nominee to withdraw the Certificate of Default resulting in reviving the IVA. If I do not have the jurisdiction to grant the order, the ultimate result will be for the debtor to take the trouble to re-apply for another IVA after the statutory period of 12 months in between and for the creditors to convene the meeting for the new application. Having considered the matter and the relevant provisions of the Ordinance, I consider that I have the power to grant the order and so I do for the following reasons.

5. The nominee may apply to this court for direction in relation to any particular matter arising under the IVA under section 20K(2) of the Ordinance. The debtor’s Proposal was approved by the creditors at the creditors’ meeting held on 9 July 2004. The Proposal is an agreement between the debtor and the creditors. The nominee filed the Certificate of Default pursuant to Condition 3G of the Proposal. He also has terminated the IVA by filing the Certificate.  The termination of the IVA was not effected under any statutory provisions under the Ordinance. It is at most a contractual right given to the nominee under the Proposal. As such, I consider that he may withdraw the Certificate of Default with the consent of the debtor and all the creditors unless the Official Receiver for any reasons objects to the application. As the Official Receiver has raised no objection, I can see no prejudice to anyone if the order is granted. On the contrary, I consider that it would cause great inconvenience to the debtor and the creditors by refusing this application, causing the debtor to reapply for another IVA subject to the statutory restriction of 12 months in between and further costs to the debtor, who is now in financial difficulties. This will not put the creditors in any better position either.