Re Aquality Engineering Co. Ltd. (Company Number 107025)

HCCW001023/2001

HCCW 1023/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP NO. 1023 OF 2001

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Coram: Hon Yuen J in Court

Date of Hearing: 14 January 2002

Date of Decision: 14 January 2002

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DECISION ON ADJOURNMENT

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1.This petition is based on an amount of $18.5 million said to be owed by the Company to the Standard Chartered Bank. A statutory demand was served in early September 2001 and a petition was presented on 10 September 2001.

2.On that day or shortly before it apparently, the managing director of the Company had told the employees that the Company had to cease its business for financial reasons. Provisional Liquidators were appointed by the court on 10 September 2001. The main purpose of so doing was apparently to save the position of the Company in respect of various slope maintenance contracts it had entered into with the Government.

3.It would appear from the evidence so far filed on behalf of the Petitioner and on behalf of the Provisional Liquidators that the arrangement which is now sought to be effected is a novation of the contracts entered into by this Company with the Government, and the target is to effect a novation such that the sub-contractors would become the direct contractors of the Government and in this process, it is hoped that the Company would not be detrimentally affected by any forfeiture made by Government of its contracts thereby leading to a loss of income and to a liability in damages, both to the Government and to its sub-contractors.

4.A period of 3 months has been sought on behalf of the Petitioner to see if this novation can take effect. There is no affidavit on behalf of the directors or members of the Company; indeed they have not appeared and I am informed by counsel for the Petitioner that as far as the Legal Aid Department (which represented the employees) is concerned, there has been no objection to the proposed adjournment in order to effect this novation. The period is required because the potential contractor would need to obtain the relevant licence to become the direct contractor of the Government.

5.In the unique circumstances of the case, I am prepared to give an adjournment of three months and I would therefore adjourn the petition to 15 April 2002.

Representation:

Mr Thomas Lee, instructed by Messrs Deacons, for Petitioner Company, not appearing

Mrs M Lam from the Official Receiver's Office