Re King Kong (Groups) Ltd.

Re King Kong (Groups) Ltd.

The Court exercised its discretion under s.206(2) and Rule 45 to resolve the difference in favour of appointing alternative private liquidators because (1) the Official Receiver lacked resources to manage assets outside Hong Kong, making the contributories' determination for the Official Receiver unviable, and (2) there was a real and substantial appearance of conflict in appointing Ernst & Young partners given their audit association with the China Merchants group and Daily On, the Company's primary asset; therefore Mr Rainier Lam and Mr David Hague were appointed to avoid conflict and protect asset realisation.

Citation
Re King Kong (Groups) Ltd.
Parties
Company: King Kong (Groups) Limited; Official Receiver/provisional Liquidator: Official Receiver and Provisional Liquidator; Creditor/petitioner: Guangdong International Trust and Investment Corporation Hong Kong (Holdings) Limited (Gitic); Proposed Liquidator (creditors' Choice): Mr Matthew O'Driscoll; Proposed Liquidator (creditors' Choice): Mr Stephen Liu; Appointed Joint and Several Liquidator (by Court): Mr Rainier Lam; Appointed Joint and Several Liquidator (by Court): Mr David Hague; Contributory: Wong Yin; Creditor: China Merchants
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
10 October 2001
Case Number
HCCW1026/2000
Procedural Posture
Companies Winding Up (determination Under S.206(2)) / Determination Hearing to Resolve Difference Between Creditors and Contributories on Appointment of Liquidator
Outcome
Court appointed Mr Rainier Lam and Mr David Hague as joint and several liquidators; refused appointment of Mr Matthew O'Driscoll and Mr Stephen Liu due to conflict concerns and practical considerations regarding Official Receiver's capacity.
Legal Topics
Appointment of Liquidator, Conflict of Interest in Insolvency, Stay of Winding Up, Notice and Evidence, Costs in Liquidation
Source Language
EN
Company Law Insolvency Civil Procedure Appointment of Liquidator Conflict of Interest in Insolvency Stay of Winding Up Notice and Evidence Costs in Liquidation

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Parties

King Kong (Groups) Limited

Company

Official Receiver and Provisional Liquidator

Official Receiver/provisional Liquidator

Guangdong International Trust and Investment Corporation Hong Kong (Holdings) Limited (Gitic)

Creditor/petitioner

Mr Matthew O'Driscoll

Proposed Liquidator (creditors' Choice)

Mr Stephen Liu

Proposed Liquidator (creditors' Choice)

Mr Rainier Lam

Appointed Joint and Several Liquidator (by Court)

Mr David Hague

Appointed Joint and Several Liquidator (by Court)

Wong Yin

Contributory

China Merchants

Creditor

Procedural Posture

Companies Winding Up (determination Under S.206(2)) / Determination Hearing to Resolve Difference Between Creditors and Contributories on Appointment of Liquidator

Legal Issues

  1. 1 Whether the Court should resolve the difference between creditors' and contributories' determinations under s.206(2) and Rule 45
  2. 2 Whether proposed appointees (partners of Ernst & Young) are disqualified by conflict of interest in relation to the Company's principal asset Daily On
  3. 3 Whether contributories' attempts to salvage the Company and an anticipated stay justify delaying appointment of liquidators

Ratio Decidendi

The Court exercised its discretion under s.206(2) and Rule 45 to resolve the difference in favour of appointing alternative private liquidators because (1) the Official Receiver lacked resources to manage assets outside Hong Kong, making the contributories' determination for the Official Receiver unviable, and (2) there was a real and substantial appearance of conflict in appointing Ernst & Young partners given their audit association with the China Merchants group and Daily On, the Company's primary asset; therefore Mr Rainier Lam and Mr David Hague were appointed to avoid conflict and protect asset realisation.

Court Disposition

Court appointed Mr Rainier Lam and Mr David Hague as joint and several liquidators; refused appointment of Mr Matthew O'Driscoll and Mr Stephen Liu due to conflict concerns and practical considerations regarding Official Receiver's capacity.

Orders

  • Mr Rainier Lam and Mr David Hague appointed joint and several liquidators of King Kong (Groups) Limited.
  • There shall be no committee of inspection.