BANK OF CHINA (HONG KONG) LTD v. THE REGISTRAR OF COMPANIES AND OTHERS

HCMP 475/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 475 OF 2008

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J U D G M E N T

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1.  This is an application taken out by the Bank of China (Hong Kong) Limited under section 290(1) of the Companies Ordinance, Cap. 32.  The applicant seeks an order that the dissolution of Country Best Enterprises Limited (“the Company”) on 7 May 2007 be declared void, and that there be appointed in the place of the former liquidators as the joint and several liquidators of the Company, Mr Cosimo Borrelli and Ms Jacqueline Walsh.

2.  The application is made within two years of the date of dissolution of the Company.  The applicant had lodged a proof of debt in the liquidation of the Company claiming HK$10,075,171.42 and US$26,166,127.91 and its claim is unsatisfied.

3.  I understand that the debt has been sold and assigned by the applicant, but the applicant continues to act as the trustee in respect of the assigned debt, so it is clearly an interested party for the purpose of the present application.

4.  This application is necessary to enable the applicant to pursue legal proceedings in China against a guarantor in respect of the debt.  The background matters may be stated as follows.

5.  The Company was ordered to be wound up by the court on 12 March 2003, and the former liquidators were appointed on 5 November 2003.  The provisional liquidators had issued a report to the creditors on 25 July 2003 stating that they did not propose to adjudicate any creditors’ claims until they had established there were sufficient funds in the liquidation to enable a distribution to be made to the creditors.

6.  On 13 March 2006, the liquidators sent to every creditor and contributory a statement showing the position of the Company at the date of their application for release, stating that there were insufficient funds in the liquidation to enable a distribution of dividend to any category of creditors.

7.  On the application of the liquidators, the court ordered them to be released on 14 February 2007 and the liquidators filed with the Companies Registry a certificate of release of liquidators on 20 March 2007.  They applied for an order that the Company be dissolved and the order for dissolution was made on 7 May 2007.

8.  The debt of the applicant comprises outstanding sums due and owing by the Company to the applicant under two facility letters, both were partially guaranteed by China National Feedstuff Group Corporation (“the guarantor”).  The applicant’s claim in its proof of debt was not adjudicated as the liquidators had concluded that there were insufficient funds to enable a distribution of dividend to be made.

9.  On 31 August 2005 and 26 October 2005, the applicant brought legal proceedings in China against the guarantor for the debt.  The court in China informed the applicant’s lawyers that its debt must be adjudicated and confirmed by the liquidators in Hong Kong for the legal proceedings to proceed.

10.  On 30 May 2007, the applicant wrote to the liquidators requesting a reply to confirm the value of its debt and that there were no assets or dividends distributed to any of the creditors.  The liquidators responded on 29 June 2007 stating that the Company had insufficient funds to distribute any dividends, but did not confirm the value of the applicant’s debt.  It would appear that the liquidators were unwilling to provide a letter to the court in China stating that the amount they would have adjudicated in respect of the applicant’s proof of debt would have been the amount as claimed, if there had been sufficient funds for a distribution to be made.

11.  The revival of the Company is to enable the applicant to pursue its debt against the guarantor in the court in China.  The only task to be performed by the proposed liquidators is in relation to the applicant’s debt.

12.  The Registrar of Companies and the former liquidators who are the three respondents to this application have no objection to the relief sought.  It does not appear to me there should be any prejudice to any party in granting the application.  There is clearly a purpose to be served by reviving the Company.  It would be right in these circumstances to exercise my discretion to grant relief.

13.  As for the appointment of the proposed liquidators in the event that the dissolution of the Company is declared void, I should mention that the applicant has no criticism against the former liquidators in their conduct of the liquidation.

14.  Nevertheless, the applicant wishes alternate independent liquidators to be appointed and is willing to meet the costs of the proposed liquidators.  It does not appear there would be any delay or additional expense involved in the appointment of the proposed liquidators, as their involvement is likely to be very limited in scope.

15.  I would order that the 2^nd and 3^rd respondents be removed as the joint and several liquidators of the Company and that Mr Borrelli and Ms Walsh are to be appointed in their place as the joint and several liquidators of the Company.

16.  I have considered the orders proposed by the Companies Registry in its letter dated 31 March 2008 in the event that relief is granted.  I agree with Mr Sheppard that if the Company is required to change its name in the event that the name is the same as or, in the opinion of the Registrar of Companies, too like a name appearing in the index of company names maintained by the Registrar during the interim period, it should be the liquidators rather than the applicant who should cause the Company to change its name within the stipulated time.  I therefore make an order in terms of the draft submitted by counsel.