RE PROSPEROUS GLOBALCHINA HOLDING LTD

HCCW 279/2018

[2022] HKCFI 1988

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 279 OF 2018

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D E C I S I O N

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1.  On 10 December 2018 I made an order for the winding-up of the Company. The Company’s assets consist of an interest in Prosperous GlobalChina Capital Limited and Master Fortune Investments Limited and debts owed by Prosperous GlobalChina and Master Fortune to the Company.

2.  By a summons dated 19 May 2022 the Liquidators seek an order from the court giving the Liquidators’ leave to sell the assets of the Company to the original Petitioner. The reason the application has been made is that the Petitioner is a member of the committee of inspection and leave is required pursuant to rules 148 and 150 of the Companies (Winding Up) Rules.

3.  The economic value of the Company’s assets lies in the property that is ultimately owned by it in the United Kingdom. The Company’s interest in the property and the debts are to be sold for £11,275,586.83. The sale has been objected to by one member of the committee of inspection; Ms Li who opposed the winding-up petition. It would appear that her objection is driven by the animus to the ultimate owner of the Petitioner Dr Chen which is referred to in my decision dated 10 December 2018. I understand Ms Li, who has not appeared before the court today, does not suggest that the sale of the Company’s assets would be at an undervalue or for some other reason that it is not in the best interests of the creditors.

4.  In the circumstances I can see no reason not to sanction the proposed sale and I will make an order in the terms of [1]–[3]. Costs of the application be reserved.

Ms Tiffany Chan, instructed by Wilkinson & Grist, for the liquidators

Mr Wilmot, of Tanner De Witt, for the Yi Chun Navigation Inc.

Attendance of the Official Receiver was excused

HCCW 279/2018

[2018] HKCFI 2789

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING‑UP PROCEEDINGS NO 279 OF 2018

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D E C I S I O N

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1.  On 28 September 2018, Yi Chun Navigation Incorporated issued a petition against the Company seeking an order that the Company be wound up on the grounds of insolvency. The petitioner relies on non‑payment of a debt said to arise from a loan agreement dated 23 June 2015, pursuant to which the petitioner advanced a loan of GBP10 million to the Company. The petition is opposed by an opposing contributory, Li Fu Hua. There is no dispute, however, that the loan was advanced, and that there is outstanding a substantial proportion of the debt. The petitioner says that it is GBP7,461,148.58.

2.  The Company is also subject to another winding-up petition issued by Ms Li herself which also constitutes an unfair prejudice petition.

3.  The defence to the petitioner’s petition can be summarised as follows: When the Company was established, the opposing contributory reached understandings with the owner of the petitioner, Dr Chen Ching Chih, that Dr Chen would provide capital to finance the Company’s developing business. The capital structure of the Company involved Ms Li owning 51% of the issued shares and Dr Chen 49%.  Dr Chen, through the petitioner, initially issued GBP1.5million by way of capital.

4.  It appears to be Ms Li’s case that Dr Chen, who is considerably older than her, had, what I shall describe for want of a better expression, a romantic interest in her which in the fullness of time, it became apparent she did not reciprocate.  As a result, by December 2016, when the Company required further cash in order to continue its business, Dr Chen gave Ms Li two choices as to how he was willing to provide the finance that she thought was required by the Company.  She says that during a business trip to Birmingham, Dr Chen told her on 2 December 2016 that the choices were either she slept with him, in which case he was prepared to provide additional finance in the form of capital, or if she did not wish to do so, he instead would lend money to the Company.  Ms Li chose the latter and as a result, the GBP10 million was advanced, although, as is apparent from what I have said earlier in these reasons, the loan agreement was back-dated to 23 June 2015. 

5.  The argument of Mr Lam, who appeared on behalf of Ms Li, on precisely how these circumstances in some way restricted the petitioner’s ability to require repayment of the loan was unclear.  However, it seems fairly clear from his submissions, and also the way in which Ms Li’s case is put both in her affirmation filed in this petition and also the way her case is set out in her own petition when it deals with the understandings between Dr Chen and herself which led to the formation of the Company, that neither the petitioner nor Dr Chen was under any obligation to contribute further capital to the Company.  It seems to follow that in these circumstances the suggestion, and this is what is said to constitute a bona fide defence on substantial grounds to the petition, that the loan was advanced under duress and this provides a defence is simply misconceived and unsustainable. 

6.  I will, therefore, make the normal winding-up order.