Re Sunfill Ltd

HCCW 282/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 282 OF 2013

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D E C I S I O N

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1.This is an application taken out by the liquidators (“the Liquidators”) of Sunfill Limited (“the Company”) pursuant to Section 209A of the Company Ordinance, Cap 32, for an order that the compulsory winding up of the Company be conducted as if the winding up were a creditors’ voluntary winding up.

2.The winding up order was made on 11 December 2013.  The Liquidators were appointed by an order dated 26 May 2014.

3.The Official Receiver has effectively taken a neutral position and indicated that he would not attend the hearing.

4.The Company is incorporated under the laws of Hong Kong.  The Company wholly owns Silk Road Development Company Limited (“Silk Road”).  Silk Road is in turn the 80% shareholder of Gansu Dunhuang Lodge Hotel Company Limited (“the Hotel Company”).  A company incorporated in Dunhuang, Gansu in the Mainland and operates a Silk Road Dunhunag Hotel (“the Hotel”). The Company’s assets include two shares of Silk Road of a total value of HK$84,957,381 (“Silk Road Shares”), and a chose in action, namely a debt in the sum of HK$82,899,999 due from Silk Road (“the Silk Road Debt”), totalling HK$167,857,380. 

5.There have been changes to the creditors and shareholders of the Company.  As of the date of this application, Cultural Resources is the only creditor and sole shareholder of the Company.  The estimated liabilities amount to HK$196,883,370.

6.The main reason for this application is to save costs with a view to maximise the amount available to the creditors, which is a legitimate reason to seek for a conversion. 

7.Taking into account the purpose of the present application and the list of factors listed out in Section 209A(2), I would exercise the discretion to order the conversion.

8.First, the present application is supported by Cultural Resources which is the only creditor and shareholder of the Company. At a meeting of the creditors and contributories of the Company on 14 June 2016, a resolution supporting the present application was duly passed. 

9.Second, Proof of Debts and the Statement of Affairs have been submitted under Section 190.  The Company’s assets, including the 2 Silk Road Shares of a total value of HK$84,957,381 and the benefit of the Silk Road Debt in the sum of HK$82,899,000, are valuable.  At this stage, the Liquidators opine that it is about time for the realisation and the distribution of the Company’s assets, but it is not certain how the economic value of the Company’s assets would be realised.  In other words, there is nothing in relation to the progress of the winding-up proceedings which should negate the making of a conversion order.

10.Third, the Liquidators consider that the liquidation of the Company does not warrant any further investigation.  There is no allegation or evidence to suggest that there was any wrongdoing, or that there exists any matter which warrants further investigations.  Further there is nothing to suggest that there has been any failure on the part on the part of the directors to provide a statement of affairs or to co-operate with the Official Receiver or the Liquidators.  Based on these considerations, this is an appropriate case for the court to exercise the discretion to order the conversion. 

11.On the safe side, the Liquidators also ask for an order to extend the time for the making of the application under section 209A(1) of the Ordinance.  However, a plain reading of the section indicates that the three months’ period should start to run from the date of a resolution to make such an application passed at any of the meetings including a joint meeting of the creditors and the contributories held pursuant to section 194. In the present case, the resolution was passed at the meeting of the creditors and the contributories of the Company on 14 June 2016 and the application was made on 22 June 2016.  In such case, the application was made within three months of the passing of the relevant resolution, and so I take the view that no extension of time is required for the present application.

12.The Liquidators also ask for an order that they do continue to act as the liquidators of the Company.  Obviously, the creditors have the primary interest in the conduct of the liquidation of an insolvent company, and so the court, in exercising its discretion in appointment of liquidators, should have regard to their wishes.  Furthermore, there is no objection from the Official Receiver in this regard.  Hence, I exercise my power under section 209A(5) to order the existing Liquidators to continue to act as the liquidators of the Company.

13.I therefore make an order in terms of the summons, save that I delete paragraph 2 because I take the view that no order for extension of time is required in the present case. 

Mr Jose-Antonio Maurellet SC and Mr Michael Lok, instructed by Sit, Fung, Kwong & Shum, for the Liquidators

The Official Receiver, absent