Re S. Megga Telecommunications Ltd.

HCMP005551/2001

HCMP 5550/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.5550 OF 2001

____________

____________

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.5551 OF 2001

____________

(Heard together)

Coram: Hon Yuen J in Court

Date of Hearing: 1 March 2002

Date of Ruling: 1 March 2002

_____________

R U L I N G

_____________

1.This is an application for sanction of schemes for two companies, the first being Wireless Internetworks Limited ("Win") which is the holding company of the other company involved which is S. Megga Telecommunications Limited ("S. Megga") which is an indirect wholly-owned subsidiary of Win.

2.It was originally intended that the proposals for both schemes would be heard together today. However, in respect of the S. Megga scheme, there has been opposition from employees of that company who objected to the scheme on the basis that they would do better as preferential creditors in the winding-up than as creditors under the scheme.

3.The Receivers have indicated through counsel that they wish to put in evidence in reply, to the effect that the preferences to which the employees are entitled under section 79 of the Companies Ordinances have been respected under the scheme.

4.Although counsel for the employees has objected to the Receivers putting in evidence for that, and the consequential adjournment that would have to be made, I take the view that the Receivers ought to be entitled to put in such evidence as has been indicated, and therefore I have to adjourn the hearing of this scheme for S. Megga.

5.Mr Scott, for the Receivers, has indicated that an affidavit would be available very soon and I am happy for him to file and serve an affidavit by 5 March 2002, which is next Tuesday, and I will further direct, in view of the time considerations involved, that there should be an early hearing date for the adjourned hearing.

6.The Receivers have also asked for the hearing of the Win scheme to proceed today quite apart from the S. Megga scheme. I find some difficulties with that because part of the restructuring proposal which has been agreed between the Company and the investors is a Hive Down under which some assets of S. Megga were transferred to another company.

7.Counsel for Win accepts that there is at least a risk that the Hive Down may be challenged by the liquidators of S. Megga should the S. Megga scheme fail and S. Megga be wound up. It has not been shown to me on the present evidence that if that Hive Down is set aside in future that the restructuring proposal agreed between the Company and the investors would not be affected. Consequently I take the view that it would not be appropriate for the Win scheme to be heard today in the absence of a hearing of the S. Megga scheme today. Consequently I would also have to adjourn the hearing of the Win scheme today.

Representation:

Mr John Scott, SC instructed by M/s Deacons, for the Applicant (HCMP 5550-1/01)

Mr CHAN Chi Hung instructed by DLA, for Opposing Creditors, Chan Shu Bun in HCMP 5551/01