Re Bcci Finance International Ltd.

HCCW000218A/1991

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Coram: Hon. Jones J. in Court

Date of hearing: 2nd March 1992

Date of judgment: 2nd March 1992

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J U D G M E N T

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1. Petitions were presented on the 17th July 1991 by the Financial Secretary pursuant to a direction of the Governor in Council under s.53(1)(iii) of the Banking Ordinance to wind up BCC (HK) Limited and BCCI Finance Limited on the grounds that it was in the public interest. The Official Receiver was appointed on the same day to be the provisional liquidator and Special Managers were also appointed.

2. The petitions were heard on the 27th August 1991 when they were adjourned from time to time until today to enable negotiations that had already commenced to continue in an attempt to sell the banks as going concerns. In fact, conditional Heads of Agreement with the Hong Kong Chinese Bank Limited were entered into by the Official Receiver on the 2nd September 1991. However, that agreement was subject, inter alia, to a guarantee being given by the Government of Abu Dhabi, the major shareholder, for any unrecorded liabilities.

3. Despite the considerable efforts made by the official Receiver, the Special Managers and their advisers, the optimism expressed in the early stages evaporated in the middle of December 1991 when a number of substantial claims were made. These claims total over two billion dollars.

4. The Official Receiver, in the time available, has not been able to make a detailed investigation into these claims but is of course not entitled to reject them out of hand. In view of these claims and in the absence of a satisfactory guarantee from the Government of Abu Dhabi, the Official Receiver and the Hong Kong Chinese Bank agreed to withdraw from further negotiations. The Government of Abu Dhabi had only in principle given a limited guarantee up to US$25 million as to amount and to the 5th November 1991 as to time which was subsequently extended to the 31st March 1992. The decision of the Official Receiver and the Hong Kong Chinese Bank was communicated to the Depositors' Committee on the 19th February 1992.

5. There was, on that day, a last ditch attempt made by the depositors to set aside 20% of their deposits, amounting to between eight hundred million dollars and one billion dollars for the purpose of unrecorded liabilities, but this proposal was unsuccessful.

6. As no other offer for the sale of the banks on acceptable terms has been made, the official Receiver has now informed the Court that the best interests of the depositors and other creditors will be best served by the liquidation of both companies.

7. Except for seven depositors today who indicated their opposition to the winding up orders being made, there is now no formal opposition to the two petitions. These seven depositors have expressed their views to me with regard to this matter and I have taken them into consideration, but understandably none of them has been able to put forward any alternative proposal to that of liquidation. In fact, whilst considerable feeling has been expressed to the making of the winding up orders for other reasons, there is, at the end of the day, no alternative. Indeed, I am satisfied that the majority of the creditors, although they have expressed objection, nevertheless, realistically accept that there is no other course open.

8. The circumstances that led to the closure of the banks and the subsequent steps taken to sell the companies has resulted in a great deal of controversy. However, it is not the court's function to comment on these matters, including the decision made to try to effect a sale. However, I am aware that the Official Receiver and his advisers worked extremely hard to reach an agreement for the sale of the two companies. I share their disappointment and that of the depositors the other creditors, and all those concerned, that those efforts did not materialise in a successful result.

9. It is clear that in the absence of any alternative proposal that it is in the public interest that both companies be compulsorily wound up with costs and I so order.

Representation:

Mr P. Jolly (Attorney General's Chambers) for Petitioner

Mr E. O'Connell for Official Receiver

Mr A. Houghton (Sinclair Roche) for Creditors originally opposing