YIDONG (HK) LTD v. CHAN KING MAN AND ANOTHER

HCCW 425/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 425 OF 2012

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IN THE MATTER OF SMARTECH DISPLAY LIMITED

and

IN THE MATTER OF the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32)

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BETWEEN

YIDONG (HK) LIMITED Petitioner

and

CHAN KING MAN 1st Respondent
SMARTECH DISPLAY LIMITED 2nd Respondent

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Before: Hon Harris J in Chambers

Date of written submissions from the petitioner: 19 April 2016
Date of written observation from the Official Receiver: 20 April 2016
Date of Decision: 29 April 2016

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D E C I S I O N

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1. I have before me an application made by Yidong (HK) Limited (“Yidong”) pursuant to section 209(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 to stay the winding up of the Company. The Company was wound up on the ground of insolvency on 23 January 2013. The presentapplication is straightforward. The Company has two shareholders: Super Deluxe Investments Limited (“Super Deluxe”), which holds 70% of its issued capital, and Chan King Man, who holds the remaining 30%. Super Deluxe was owned by Yiu Chun Pong.Mr Yiu has sold his shares in Super Deluxe to Yidong. Yidong wishes to continue the Company’s business which was conducted througha subsidiary in the Mainland, which is synergistic with its own business. Mr Chan agrees. Yidong has already paid all the Company’screditors and taken a novation of most of the debts, which gives it locus to make the present application.

2. Section 209(1) provides:

“The court may at any time after an order for winding up, on the application either of the liquidator, or the Official Receiver,or any creditor or contributory, and on proof to the satisfaction of the court that all proceedings in relation to the winding upought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditionsas the court thinks fit.”

3. The principles and criteria by reference to which the court determines applications to stay winding‑up proceedings under section 209 (1) are well established and explained in Kwan J’s (as she then was) decision in Re Outboard Marine Corp Asia Ltd[1]. Briefly they are as follows:

(1) The power to grant a stay of winding up proceedings is discretionary.

(2) The burden is on the applicant to make out a sufficient case that carries conviction. Before granting a stay, section 209 (1) requires “proof to the satisfaction of the court that all proceedings in relation to the winding up ought to be stayed ”.

(3) Whether there are sufficient assets to pay all the creditors of the company and the expenses of the liquidation. The courtwill also have regard to the interests of shareholders.

(4) The court will also consider whether a stay is conducive or detrimental to commercial morality and to the interests of thepublic at large.

4. The Liquidators have filed a report confirming that they have identified no matters that require investigation or call into questionthe propriety of the conduct of the Company’s affairs. The fees of the Liquidators and the Official Receiver have been providedfor and the Official Receiver has raised no objection to the application.

5. I am satisfied on the evidence before me that the restructuring of the Company’s debt will result in it being returned to solvencyas Yidong does not intend to enforce debts it has bought. The stay is for a sensible and discernible purpose and all those interestedin the liquidation, creditors and Mr Chan, benefit from it and nobody has objected to it.

6. I will, therefore, grant the stay sought.

(Jonathan Harris)
Judge of the Court of First Instance
High Court

Ms Elaine Liu, instructed by Philip TF Wong & Co, for the petitioner

Chan King Man, the 1st respondent, in person (did not file any written submissions)

The provisional liquidator of Smartech Display Limited, the 2nd respondent (did not file any written submissions)

Ms Ophelia Lok, Assistant Principal Solicitor for the Official Receiver



[1] [2003] 1 HKLRD 585