LAI CHEUNG WAI v. THE JOINT AND SEVERAL LIQUIDATORS OF STUTTGART INTERNATIONAL MOTORS (HOLDINGS) LTD

HCCW 494/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 494 OF 2003

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D E C I S I O N

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1.  This is an application taken out by Lai Cheung Wai, a contributory of Stuttgart International Motors (Holdings) Limited (“the Company”), under section 209 of the Companies Ordinance, Cap. 32.  The applicant seeks an order that all further proceedings in the winding up of the Company be stayed permanently.  The summons has been served on the petitioning creditor, the liquidators and the Official Receiver.  There is no opposition on the part of any one.  The background to the application may be set out as follows.

2.  The Company was incorporated in Hong Kong on 13 December 1996.  It commenced trading as a car dealer in 1999.  At the time a creditor’s petition was presented to wind up the Company in May 2003, the Company had been trading for about 4 years.  The Company was the wholly owned subsidiary of Smart (International) Investment Limited, a company incorporated in Hong Kong.  Its ultimate holding company was Rich Concept Group Limited, a company incorporated in the British Virgin Islands.

3.  The petition to wind up the Company was presented by its only creditor, Blain Associates (HK) Limited.  On 23 April 2003, the petitioner obtained a judgment after trial in the District Court for HK$200,800.00 with interest.  As the Company was not satisfied with the outcome of the trial, it did not pay the judgment debt.  The applicant has accepted that this attitude of the Company was neither rational nor sensible.

4.  On 20 August 2003, an order was made to wind up the Company and the Official Receiver was constituted the provisional liquidator.  He was later replaced by two outside liquidators.  They in turn were replaced by James Wardell and Chan Wai Dune, both of CCIF Corporate Advisory Services Limited, by an order made on 12 April 2006.

5.  After the winding-up order was made, the solicitors for the petitioner and the solicitors for the contributories entered into negotiation regarding satisfaction of the judgment debt.  On 15 December 2003, the parties reached an agreement on the total amount payable, which was HK$370,000.00.  This amount was paid on 22 December 2003 and the liquidators of the Company were informed of the settlement of the petitioner’s claim.

6.  On 15 March 2004, the liquidators wrote to the solicitors for the contributories to inform them that even though the debt owed to the petitioner was settled and the petitioner had withdrawn its proof of debt, the liquidators were still investigating into the affairs of the Company.  Between March 2004 and March 2005, the contributories and/or their solicitors attended meetings with the liquidators and answered queries raised.  I understand no further requisition has been raised by the liquidators since March 2005.

7.  The contributories intend to revive the business of the Company, given that it had a successful trading history, and had established good business connection and goodwill in car dealing.  The contributories met in January 2006 and reached an agreement that if the application to stay the winding-up proceedings is granted, they would invest HK$1 million to enable the Company to continue its business.

8.  The liquidators have entered into negotiations with the contributories regarding the further disposal of the winding-up proceedings.  The liquidators have confirmed that they have no adverse comments regarding the conduct of the Company’s affairs.  They would accept a deposit of HK$120,000.00 by way of security for their costs, to be taxed if not agreed.  This deposit is to be paid to the liquidator’s account on or before 15 May 2006.

9.  It would appear that the Company should have sufficient capital to continue its business, given that the contributories have expressed willingness to inject HK$1 million into the Company, and that the Company would have financial support from its associated company, AGA Motors (Holdings) Limited.

10.  I am satisfied that a sufficient case is made out to stay the winding-up proceedings permanently.  The claim of the only creditor has been settled and paid.  There would appear to be no improper dealings as would require further investigation by the liquidators.  Arrangement has been made to pay the costs of the liquidation.

11.  I make the following orders:

(1) Upon payment of HK$120,000.00 by the applicant to the liquidators’ account as security for the liquidators’ costs in the administration of the liquidation and for this application, all further proceedings in the winding up of the Company are permanently stayed.

(2) A notice of this order is to be advertised in the Gazette at the expense of the applicant.

(3) A copy of this order is to be delivered by the liquidators to the Registrar of Companies within 7 days hereof.