RE WONG WAH

HCB4834/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN BANKRUPTCY PROCEEDINGS NO.4834 OF 2000

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REASONS FOR DECISION

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Introduction

1. This is an application to appoint an outside trustee for the estate of the Bankrupt, Wong Wah in place of the Official Receiver. On 2 December 2003, I allowed the application and appointed Mr Johnson Kong Chi How ("Mr Johnson Kong") and Ms Cindy Chau Yin Fong ("Ms Cindy Chau"), both of BDO McCabe & Lo, Certified Public Accountants as the joint and several trustees. These are my reasons.

Bankruptcy

2. The Bankrupt was a director of Nam Fong International Holdings Limited ("NFIH"), a listed company, and its affiliated companies. On 27 November 2000, Guang Xin Enterprises Limited (in voluntary liquidation) ("GXE") presented a bankruptcy petition against the Bankrupt. On 20 April 2001, a bankruptcy order was made against him. The Official Receiver was appointed trustee in bankruptcy.

3. The Bankrupt's statement of affairs was finalized on 1 August 2001. According to the statement of affairs, as at the date of the bankruptcy order, the Bankrupt had assets at the value of HK$2,030,129.68 comprising bank balances of HK$15,408.68, a landed property in Singapore of HK$1,720,000.00, life insurance policy of HK$289,883.40 and household furniture of HK$4,837.50. He had shares in 25 limited companies with a total investment value that exceeded HK$27,000,000.00. He also had a family trust in favour of his wife and himself in the name of Great Capital Holdings Limited which had net asset value in the region of HK$680,000,000.00. It held 412,276,000 shares in NFIH. The estimated realizable value ascribed to these enormous assets by the Bankrupt was nil.

4. The Bankrupt listed 15 creditors in the statement of affairs. The total amount of indebtedness allegedly owed by him amounted to HK$760,979,381.56 of which HK$161,933,906.79 was admitted. The creditors that involved in this application are South East Group Limited ("SEG") on the one hand, Guangdong Enterprises (Holdings) Limited ("GEH") and Guangdong Credit Limited ("GCL") on the other. SEG obtained judgment against the Bankrupt in HCA10805/2000 after trial on 9 April 2001 for US$5,000,000.00 with interest. With the interest accumulating, the total amount of the judgment debt as at the date of the bankruptcy order came up to a total of HK$48,952,543.54. The debts owed to GEH and GCL were HK$328,757,727.50 and HK$52,458,845.87 respectively. The Bankrupt disputed all the debts due to SEG, GEH and GCL.

5. The realization of the Bankrupt's assets by the Official Receiver yielded little success. As at 16 June 2003, the assets realized amounted to a negligible sum of HK$6,189.14 only. 15 proofs of debt have been filed in the total sum of HK$524,045,451.51, RMB3,476,000 and US$8,440,365.97.

The first creditors' meeting

6. On 24 July 2001, the first creditors' meeting was held. Nine creditors, including SEG, GEH and GCL attended. The meeting discussed the appointment of trustee. GXE proposed to appoint Mr Gabriel Tam and Mr Alan Tang of KPMG as trustees. Two other creditors, namely, China Insurance Group Finance Co. Ltd ("CIG") and Yu Fung Company Limited ("YF") proposed that the Official Receiver be appointed, which proposal was accepted by the majority in value of the creditors present at the meeting. The meeting further resolved that a creditor's committee be appointed. Five creditors whose claims were more substantial were then appointed as members of the committee by consent. They were CIG, YF, SEG, GEH and GCI.

The 1st committee meeting

7. The committee held the first meeting on 4 October 2001. Members were provided with the Bankrupt's statement of affairs. Thereafter, SEG came to know from various reports in the newspapers that the Bankrupt might have made preferential payments to one of his unsecured creditors, namely, Ceasar's Palace Casino. According to these reports, Ceasar's Palace Casino and Sheraton Desert Inn commenced actions in the High Court on 23 August 1998 for a total sum of HK$42,600,000.00. But in the statement of affairs, Ceasar's Place Casino was not stated as a creditor. It therefore appeared that the Bankrupt had settled the debt due to the Casino sometime between 23 August 1998 and 1 August 2001. By a letter dated 29 November 2001, SEG requested the Official Receiver to look into the matter. By a further letter dated 21 January 2002, SEG asked the Official Receiver to consider holding a public examination of the Bankrupt. In his reply letter dated 22 January 2002, the Official Receiver advised SEG that there was no fund in the Bankrupt's estate; that his office had limited resources; that he had no objection to having a public examination provided that SEG agreed to fund the costs; and that SEG might wish to consider the option of outside trustee and summon another committee meeting.

8. It transpired that the Official Receiver did subsequently ask the Bankrupt to explain the matter. The debt due to the Casino was apparently settled on 14 July 2000. By a letter dated 25 March 2002, the Bankrupt's solicitors advised the Official Receiver that the debt (HK$7,450,000.00) was paid to the Casino by some third parties, some of which were companies in which the Bankrupt was a shareholder.

The 2nd committee meeting

9. In the meantime, SEG picked up the Official Receiver's suggestion and request a second committee meeting to be held to appoint Mr Alan Tang and Ms Alison Wong of Grant Thornton to be the outside trustees. The meeting took place on 28 February 2002. Mr Alan Tang and Ms Alison Wong offered to attend the meeting to answer any query that the creditors might have. The offer was however turned down by Mr M. Wong of the Official Receiver's Office, who was in charge of the matter. At the meeting, no resolution was passed on the proposed appointment as some members wanted more information about the proposed trustees. After the meeting, SEG circulated the requested information to other members of the committee.

The impasse

10. By letter dated 15 April 2002, CIG indicated that they did not support the appointment. At this stage, Mr Alan Tang began to involve himself in correspondence with the Official Receiver and later with the solicitors for GEH and GEI, Richards Butler ("RB") regarding the appointment.

11. By letter dated 26 April 2002, Mr Alan Tang, among other things, drew the Official Receiver's attention to a number of observations. First, he referred to an announcement made by NFIH on 4 April 2002 that they had reached a settlement with CIG whereupon the winding-up petition presented by CIG against NFIH was withdrawn. Mr Alan Tang queried if CIG's claims in the bankruptcy against the Bankrupt would remain validly admissible claims and if CIG would still have any further interest in the outcome of the bankruptcy. Mr Alan Tang next referred to the claims by other creditors (without naming them) which were disputed by the Bankrupt. His understanding was those claims might be open to challenge and should be closely investigated by the trustee in bankruptcy. He then pointed out that "a number of such claims are members of the Creditors Committee".

12. By letter dated 2 May 2002, Yu Fung agreed to the appointment of Mr Alan Tang and Ms Alison Wong.

13. GEC and GCI by RB's letter dated 2 May 2002 requested further information of Mr Alan Tang and Ms Alison Wong. RB was in particular concerned about the costs involved and asked for additional information on costs related matters. In the ensuing correspondence, the possibility of convening a general creditors' meeting to consider the appointment was discussed. RB took the view that convening the meeting was not likely to resolve the matter. They repeated the request for additional costs information. This prompted a letter in response by Mr Alan Tang dated 4 June 2002 addressed to the Official Receiver. Mr Alan Tang had this to say :

"In my submission, this matter is now clearly a case where judgment and discretion of your office, as the incumbent trustee, is critical. The views and intention of different members on the Creditors Committee appear diverse; some obviously wanting outside trustees to be appointed to pursue vigorous investigations into various matters; others ostensibly paying lip service only to their duties as members of the Committee, but effectively trying to stifle the current nomination for outside trustees by tactics of delay and by demanding rounds and rounds of additional information or explanations from the nominee to irrelevant questions with apparently the sole objective of protecting and ring fencing their own particular positions with regard to past and perhaps even current dealings with the bankrupt.

...

I now wish to draw your attention to certain peculiar features of this case and there are many and involving a closely related matter under Bankruptcy No. 3919 of 2000 (bankrupt - Wong Siu Mui, wife of Mr Wong Wah). A number of very significant claims submitted in these two cases by creditors (including those represented by Richards Butler) were under serious dispute and not admitted by the debtors themselves. It is my understanding that the bases for these claims have their origin in numerous complicated dealings and transactions involving these creditors, the debtors and Nam Fong International Holdings Limited, a listed company of which the bankrupts were major shareholders and directors, when there were 'restructuring' and 'reorganisation' programmes for all relevant companies from 1998 through 2001. These dealings and transactions between such parties should be the subject of detailed and serious investigation by the trustees in bankruptcy of Mr. & Mrs. Wong. With this background, it is extremely doubtful as to the true reasons for the clients of Richards Butler persistently not supporting the nomination of outside trustees to these cases. It is also extremely doubtful if these and other similar creditors should be accorded full and proper voting rights in any choice of a replacement trustee should a meeting of creditors be held.

I take the liberty to suggest that it was high time the Official Receiver exercised his judgment and discretion in these two cases, for the benefit of the general body of creditors as a whole, to dislodge any possible attempts by some to abuse the bankruptcy procedures to preserve and protect the position of individual major 'creditors', at the expense of all other genuine but smaller creditors."

These are very strong words indeed.

14. On 28 June 2002, SEG wrote to the Official Receiver expressing their concerns over the impasse. The Official Receiver then decided to call a general creditors' meeting to be held on 12 July 2002. The meeting was attended by Mr Alan Tang and Ms Alison Wong. They gave a brief description of their fee charges and answered the questions raised by YF, GCL and GEH. But the representatives of GCL and GEH were not satisfied with the information provided by them. They wanted to know if it was possible to appoint Mr Alan Tang and Ms Alison Wong as trustees for assets within the Mainland while the Official Receiver remained the trustee for Hong Kong assets. That suggestion was rejected. They then insisted that Mr Alan Tang and Ms Alison Wong should provide a written response to the questions raised in RB's letter dated 2 May 2002. In the end, the meeting resolved by majority that no trustee would be appointed in place of the Official Receiver.

15. After the meeting, Mr Alan Tang by letter dated 16 July 2002 and addressed to RB gave a written response as requested at the meeting. However, no feedback came from RB. Mr Alan Tang wrote to RB again on 4 October 2002 following up on the matter. By letter dated 25 October 2002, RB replied that the result of the meeting on 12 July 2002 reflected the majority's wish and was conclusive on the question of appointment. The response from Mr Alan Tang by letter dated 29 October, copied to the Official Receiver and other members of the creditor's committee was far from courteous. He said :

"We refer to your letter of 25 October 2002 in reply to ours of 4 October 2002. You suggested that '(y)our client considers that the result of the vote (at the creditors' meeting held on 12 July 2002) reflects the wishes of the majority in value of the bankrupt's creditors and is therefore conclusive on the question of (y)our appointment'. With respect, your clients seem to have profoundly confused their role as creditors (the validity of whose claims is still subject to adjudication) and that as members of the Creditors Committee.

...

Your clients have never put forward any basis or reasons for not supporting the nomination of outside trustees. At the creditors' meeting on 12 July 2002, other creditors present asked specifically your clients to state their reasons for objecting to the appointment of outside trustees. No reason was given. The Official Receiver's Office has made it clear that they do not have the resources to administer this bankruptcy. It therefore leaves to be asked the rationale and motives of your clients, as 'creditors' in this bankruptcy in objecting to the appointment of outside trustees. It also raises the more serious question as to whether your clients are properly discharging their statutory duties as members of the Creditors Committee, to maximize the benefit of the general body of creditors in this bankruptcy administration.

We note that your clients' claims are entirely disputed and valued at 'O' in the relevant statement of affairs, which was prepared by, as far as we understand, a 'Big 4' firm of accountants. We are also aware of numerous transactions and dealings between your clients and the Bankrupt, as well as companies then under his control, in periods shortly before the commencement of bankruptcy. We made it clear in previous submissions and proposals that, if appointed, the outside trustees would and should investigate these and other pre-commencement transactions and dealings, in their normal course of discharging their duties. No doubt any such investigations will be for the benefit of the general body of creditors, but not necessarily for those concerned.

I suggest that the Creditors Committee and the Official Receiver's Office should collectively reconsider this matter."

16. Separately, Mr Alan Tang wrote to the Official Receiver on 11 November 2002, leveling serious charges at GCL and GEH thus :

"It is my view that [GCL and GEH] are seriously abusing their position as a member of the Creditors Committee for reasons that they so far have not minded to disclose, in direct opposition to the wishes of other members on the Committee and with detriment to the interests of creditors generally. It therefore urge that your office exercise the statutory powers and discretion and duly make an application to the Court (as indicated in Your Letter) for the necessary directions or orders, such that creditors' interests may be better protected and pursued."

17. On 22 November 2002, RB wrote two letters. One was addressed to the Official Receiver and the other members of the creditors' committee, refuting the allegations by Mr Alan Tang in his letter of 29 October 2002. RB repeated their clients' view that there was little prospect that the appointment of an outside trustee would lead to a higher return after additional liquidation costs (which were likely to be substantial) were taken into account and that the appointment was therefore likely to benefit the trustees only and not the creditors. The other letter was sent to Mr Alan Tang, putting on record that their clients took great exception to his allegations and reserved all their rights.

18. The Official Receiver advised Mr Alan Tang by letter dated 2 December 2002 that if the minor creditors felt aggrieved, they could apply to court for relief.

The applications

19. Eventually, SEC took out a summons on 15 May 2003 applying for an order the Mr Alan Tang and Ms Alison Wong be appointed as trustee in place of the Official Receiver. The application was opposed by GEH and GCI. They proposed to appoint Mr Johnson Kong and Ms Cindy Chau, both of BDO McCabe & Lo instead.

The law

20. A trustee in bankruptcy, other than the Official Receiver, appointed by the creditors may be removed by them at a meeting specifically called for that purpose. They may also appoint another person to fill the vacancy : see section 96(1) of the Bankruptcy Ordinance ("the Ordinance"). The court is also empowered to remove the trustee and appoint another person in his place if any of the conditions set out in section 96(2) of the Ordinance is met. The Official Receiver is not excluded from the court's jurisdiction.

21. When the court's jurisdiction under section 96(2) of the Ordinance is invoked, it needs to be satisfied firstly that one or more of the conditions set out in section 96(2)(a) to (e) are met which justify the removal of the current trustee. The court then next decides whom to appoint as trustee in his place. In this regard, the court has a wide discretion. It is not bound by the determinations of the meeting of the creditors, although the court would have due regard to those determinations : see In Re Akai Holdings Ltd & Another [2001] 2 HKLRD 411 at p.417J. Nor is the court bound by the wish or choice of any individual creditor or the Official Receiver. There are just matters that the court would take into account. In deciding the appointment, the court considers what is in the best interests of all the creditors interested in the bankruptcy : see In Re Akai Holdings Ltd & Another [2001] 2 HKLRD 411 at p.418B. And the court takes into account all the circumstances. Although circumstances inevitably vary from case to case, the following matters, not meant to be exhaustive, are usually relevant :

(a) The size of the bankrupt's estate.

(b) The whereabouts of the bankrupt's assets.

(c) The complexity and difficulties involved in the trustee's discharge of his functions and duties, including the steps to be taken in the investigation of the bankrupt's affairs and the realization of the his assets.

(d) Whether any appointment would result in a saving in the time and costs of investigation of the bankrupt's affairs. If yes, that appointment is to be preferred : see In Re Akai Holdings Ltd & Another [2001] 2 HKLRD 411 at p.418C.

(e) Whether the proposed trustee has the requisite expertise and experience that is commensurate with the particular case. The court needs to be satisfied that he is qualified to carry out the job with competency and expediency.

(f) Independence and impartiality of the proposed trustee. The proposed trustee should not only be independent and impartial but should also be seen to be so. Any conflict of interests or even over-familiarisation should be discouraged. On the other hand, it is not every connection or action that can give rise to an allegation of an appearance of lack of independence and impartiality on which the court should act : see In Re Akai Holdings Ltd & Another [2001] 2 HKLRD 411 at p.421A-B.

With these principles in mind, I now turn to the applications.

The need to remove the Official Receiver

22. It is common ground between SEG, GCL and GEH that it is in the interests of the creditors to replace the Official Receiver with an outside trustee : see section 96(2)(e) of the Ordinance. The Official Receiver does not have any objection to the application.

23. I agree. I am satisfied that there are sufficient reasons and alarming circumstances indeed that the full investigation has to be conducted forthwith into the Bankrupt's affairs. The Bankrupt has ascribed practically nothing to his very substantial investment assets without any apparent justification on the evidence before me. He settled his debt with the Ceasar's Palace Casino purportedly with the financial assistance of companies of which he was a shareholder. Without any further evidence in support, the explanation is dubious, to say the least. The Official Receiver, hampered by the lack of funds and resources, has been unable to carry out thorough investigation including public examination of the Bankrupt, although, as acknowledged by the Official Receiver, that is clearly warranted. The bankruptcy order was made some 2 1/2 years ago. The assets realized thus far are negligible when compared with the face value of the Bankrupt's assets. This is frustrating indeed. It is no doubt in the interests of all the Bankrupt's creditors to appoint an outside trustee forthwith.

Whom to appoint

24. The substantive debate that took place before me is whom I should appoint : Mr Alan Tang and Ms Alison Wong proposed by SEG or Mr Johnson Kong and Ms Cindy Chau nominated by GEH and GCI. The Official Receiver's stance over the choice is neutral.

25. I first deal with their experience and expertise. The Bankrupt's affairs, the size of his estate, the location of his assets, the complexity and difficulty that may arise in the investigation and administration require well qualified and experienced trustees. The accountant firm that they come from must be capable of providing full and timely support as required from time to time. Both sets of proposed trustees are well qualified. Although it may be said that the credentials of Mr Alan Tang and Ms Alison Wong appear to be more impressive, there is no suggestion that Mr Johnson Kong and Ms Cindy Chau cannot properly discharge the duties and functions required of them with competency and expediency. BDO McCabe & Lo is a reputable and sizable accountant firm, which can obviously give them the support as required.

26. I next consider the wish of other creditors and note that the proposed appointment of Mr Johnson Kong and Ms Cindy Chau is supported by two other major creditors.

27. Mr Li, appearing for SEG, submitted that Mr Alan Tang had a head start in the matter. Appointing him and Ms Alison Wong would therefore save time and costs. It transpired that Mr Alan Tang was one of the joint and several liquidators acting for GXE, the petitioner who presented the bankrupt petition against the Bankrupt, which eventually led to his bankruptcy. On the evidence before me, the edge that Mr Alan Tang might have over others is not apparent. Quite to the contrary, his previous capacity as the liquidator for GXE may be detrimental to him. The reason is this. Although the claim by GXE is a judgment debt, it is disputed by the Bankrupt. If appointed as the Bankrupt's trustee in bankruptcy, Mr Alan Tang would have to adjudicate GXE's proof of debt, thus putting himself in an apparent conflict situation. It may well be argued that the conflict is not real because the debt is a judgment debt obtained by GXE after trial. But circumstances may nevertheless arise which may put him in conflict. This aspect has not been fully canvassed by evidence or submissions. Accordingly, I will just note the point without making any finding on it.

28. My determination on the appointment turns on the bias that Mr Alan Tang has against GEH and GCI. To this I now turn.

Bias

29. I have already set out Mr Alan Tang's involvement in the matter and the position that he took as revealed in the correspondence. He was obviously very determined to push forward with SEG's proposal and obtain the appointment. In the course of lobbying for the appointment, he had unfortunately gone well over the top. He cast grave doubts on the validity of the claims of those creditors who did not support his appointment and more importantly attacked the veracity and integrity of GEH and GXI when, it is now accepted, he simply did not have the requisite information or materials at the material times to enable him to do so at all. The concerns raised by GEH and GCI on costs were in my view reasonable and legitimate. Having made those unwarranted and wholly unjustified attacks against them, would Mr Alan Tang possibly be seen to be acting with fairness and impartiality when adjudicating on the disputed claims of GEH and GCI? The answer must be a resounding "no". A case of apparent if not real bias against GEH and GCI has clearly arisen. By his own conduct, Mr Alan Tang had excluded himself from the appointment. He only had himself to blame.

Conclusion

30. For the above reasons, I removed the Official Receiver and replaced him with Mr Johnson Kong and Ms Cindy Chau.

The Official Receiver's recommendation

31. For completeness, I would make one more observation. SEG said Mr Alan Tang and Ms Alison Wong were recommended to them by Mr M. Wong of the Official Receiver. Ms McKenna, appearing for the Official Receiver, did not seek to dispute this either in her report or submissions. No particular issue arose from Mr Wong's recommendation. But I would have thought that to avoid any possible allegation of favouritism or bias, it would be wise for Mr Wong or indeed any officer of the Official Receiver's office not to make any recommendation of this sort.

Representation:

Mr Joseph Li of Messrs Joseph Li & Co., for South East Group Limited

Mr Jonathan Harris, instructed by Messrs Richards Butler, for Guangdong Enterprises (Holdings) Ltd (GDE) and Guangdong Credit Ltd (GDC)

Ms P. McKenna, Official Receiver

HCB 4834/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 4834 OF 2000

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J U D G M E N T

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1. There are two petitions for bankruptcy before me. They were ordered to be heard together because the debt is the same and there are common issues involved.

2. The petitions were brought by Guang Xin Enterprises Limited which is in creditors' voluntary liquidation. The debtors are Mr Wong Wah and Madam Wong Siu Mui who are husband and wife. They are the directors of Ngai Fung International Trading Company Limited ("Ngai Fung") and Nam Fong International Holdings Ltd ("Nam Fong"). The latter is a listed company in Hong Kong

3. The petitions were founded on a debt owed by Ngai Fung to the Petitioner in the region of US$2 million under a loan agreement dated 9 January 1998 ("the Loan Agreement"). This debt was guaranteed by the debtors under a guarantee executed on the same date ("the Guarantee"). Ngai Fung was ordered to be wound up by an order of the court made on 25 April 2000 on the petition of the Petitioner.

4. It is not in dispute that under the Loan Agreement, the Petitioner had advanced US$2.5 million to Ngai Fung and the debt was to be repaid on or before 14 April 1998 with contractual interest. Save for the payment of HK$10 million on 8 June 1998, the balance of the loan had not been paid despite various letters of demand to Ngai Fung and the debtors in 1998 and 1999.

5. A statutory demand was served on Madam Wong by advertisement in a newspaper on 24 May 2000 and another statutory demand was served on Mr Wong also by advertisement on 19 October 2000. The petitions were served on their solicitors who had instructions to accept service.

6. Up to the day before this hearing, the debtors had opposed the petitions on the ground that the Guarantee was executed by them under a misrepresentation by the Petitioner's financial manager. It was alleged that they were only told that the documents they were asked to sign were to facilitate the loan arrangement to Ngai Fung and for charging their shareholdings in Nam Fong to the Petitioner as security for the loan. They were not told that one of the documents they were to sign that day was a personal guarantee given by them jointly and severally to guarantee Ngai Fung's liability to the Petitioner. The debtors claimed that they do not know English and they had never intended to provide a personal guarantee to the Petitioner.

7. At the hearing today, Mr Joeson Wong, who appeared for the debtors, informed the court that the debtors would not contest liability to the debt. Instead, he asked for one month's adjournment to give time to the debtors to pay. The proposals he put forward were as follows: HK$1 million was to be paid forthwith by a cashier order; the balance of about HK$15 million was to be paid within a month.

8. Evidence was adduced that Nam Fong Liwan Plaza Ltd, a subsidiary of Nam Fong, had mortgaged a property at Li Wan Plaza in Guangzhou to the China Merchant Bank to raise a loan of RMB30 million. The mortgage was made on 7 April this year. According to Madam Wong's affirmation, the mortgage transaction has not been completed. However, it is believed that the proceeds should be available in a month's time.

9. There was a letter from Nam Fong Liwan Plaza Ltd to Mr Wong and Madam Wong expressing willingness to make available to them the proceeds received from the bank for the purpose of paying off the debt of the debtors in the bankruptcy petitions.

10. Mr Paul Carolan who appeared for the Petitioner informed the court that the proposals were not acceptable to the Petitioner and he asked for a bankruptcy order.

11. One month's adjournment sought is not a long period. In the ordinary circumstances, I might have been more amenable to granting the adjournment. In the particular circumstances of these proceedings, I am not inclined to do so.

12. Firstly, these proposals were made at the eleventh hour. Up to yesterday, the debtors had contested liability with the serious allegation of misrepresentation against the Petitioner's financial manager and the solicitor who had attested the execution of the Guarantee. The debtors have now abandoned these allegations and they have chosen not to give evidence and be cross-examined. Mr Carolan submitted that this cast doubts on their credibility and the bona fides of their offer to pay. I agree.

13. Secondly, having looked at the documents placed before the court regarding the loan raised by Nam Fong Liwan Plaza Ltd, I do not think these documents are satisfactory. The mortgage was not signed by any officer of the bank or anyone from the mortgagor company, only two company chops were placed on these documents. As for the letter from Nam Fong Liwan Plaza Ltd to Mr Wong and Madam Wong expressing willingness to let them use the proceeds to pay the debt to the Petitioner, there is of course no binding obligation on the part of this company to do so.

14. Thirdly, I note that in September 1998, Mr Wong had provided his personal cheque to the Petitioner to settle the debt due and owing and that cheque was dishonoured. No reason was offered by the debtors why Mr Wong had failed to honour his obligation on that occasion.

15. Fourthly, there are other substantial creditors of the debtors and some of them have brought bankruptcy petitions against them and others have given notice to appear in support of the petitions. In the present proceedings, there is a supporting creditor who has given notice to appear and that creditor was owed US$2 million.

16. Earlier this week, I had adjourned the hearing of the petition in HCB No. 927 of 2000 which is a petition for bankruptcy brought against Mr Wong on the joint application of the parties so as to give him time to pay. In that matter, the hearing was adjourned several times because Mr Wong had failed to implement his obligation to pay in accordance with his proposals for repayment. I had indicated at the last hearing that no further adjournment would be granted.

17. My attention was also drawn to two other petitions for bankruptcy, being HCB No. 1881 of 2001 (which is a petition against Madam Wong) and HCB No. 2002 of 2001 (which is a petition against Mr Wong). These petitions were brought on the basis of a judgment debt obtained against them in August of last year in the sum of HK$19 million. The petitions are to be heard in June this year. Given this state of affairs, I have serious doubts whether the proposals made today to pay the balance of HK$15 million within a month would be honoured.

18. In my view, no useful purpose would be served by adjourning the hearing. As the debt is not contested, it would be appropriate in the circumstances to make a bankruptcy order against each debtor and I so order. I further order that the Petitioner is to have its costs in the two petitions.