RE THE NEW WORLD ENTERTAINMENT CO LTD

HCCW 98/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 98 OF 2003

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J U D G M E N T

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1. This is a petition brought by the Bank of China (Hong Kong) Limited against New World Entertainment Company Limited ("the Company") on the basis of a judgment debt in a mortgage action in HCMP No. 921 of 2001. By an order made in that action on 26 September 2001, the Company was adjudged to pay the petitioner HK$2,914,366.22 with interest and costs. A demand for the debt was served on the Company on 19 July 2002 and the petition herein was presented on 22 January 2003.

2. The Company has obtained leave to be represented in these proceedings by one of its directors, Mr Lam Yiu Sang Yorkson. Mr Lam filed an affirmation on 7 April 2003 setting out the grounds of opposition. It is alleged that for the past two and a half years, the Company had been repaying its debt to the petitioner by disposing of various properties mortgaged to the petitioner and that the debt had been reduced from HK$9.4 million odd to HK$2.3 million odd. As of June 2001, all the properties mortgaged to secure the indebtedness of the Company had been disposed of.

3. I should mention that apart from the mortgage action, the petitioner had also taken proceedings against Mr Lam and Madam Wong Mo Ching (collectively "the guarantors"), who had guaranteed the indebtedness of the Company to the petitioner. Judgment was obtained by the petitioner against the guarantors in HCA No. 766 of 2001 on 8 October 2001 in the sum of HK$2,920,366.22.

4. After the demand was served on the Company for the debt in the mortgage action on 19 July 2002, a deed of settlement was entered into between the petitioner and the guarantors on 22 October 2002. The deed provided that in consideration of the petitioner agreeing to withhold and suspend its right to enforce the judgment in HCA No. 766 of 2001 and/or bankruptcy proceedings against the guarantors until 29 June 2003, the guarantors jointly and severally agreed and undertook to repay the debt in the said High Court Action by eleven instalments commencing from 30 September 2002 to 29 June 2003. It was provided that time should be of the essence in the repayment schedule and that if there should be default in repayment of any instalment, all remaining outstanding sums should become immediately due and payable to the petitioner. Paragraph 6 of the deed specifically provided as follows:

"Notwithstanding the execution of this Deed of Settlement, the [petitioner] will proceed to apply to the Court for a winding up order to be made against the Company. The [guarantors] are fully aware of the petitioner's such intention."

5. Thus, it is clear from the provisions of the deed that insofar as the petitioner's right to enforce the judgment in the mortgage action against the Company is concerned, such right has not been compromised by the deed of settlement and that the petitioner is at liberty to present a winding-up petition against the Company. The deed of settlement does not constitute any valid basis to oppose this petition.

6. Mr Lam also stated that by a letter dated 20 February 2003, the Company had written to the petitioner proposing to pay 50% of the principal sum of the judgment debt in the mortgage action in full and final settlement. I understand that this proposal has been rejected by the petitioner.

7. In the circumstances, as there is no valid basis to oppose the petition and the petitioning debt is not in dispute, I make a winding-up order against the Company. I further order that the petitioner's costs are to be paid out of the Company's assets.