RE LT COMMERCIAL LTD (In Creditors’ Voluntary Liquidation)

RE LT COMMERCIAL LTD (In Creditors’ Voluntary Liquidation)

The court granted the application to appoint Mr So Man Chun and Mr Jong Yat Kit as provisional liquidators and expressly granted leave under s262B(3)(a) because practical necessity to avoid operational hiatus and to facilitate Mainland proceedings outweighed any theoretical conflict; the trustees’ creditor status was technical given the very small debt (approx. 0.24%), and on that basis no material conflict was found to preclude appointment (following the approach in Re Gold Finance).

Citation
[2021] HKCFI 2867
Parties
Petitioner (creditor): Industrial and Commercial Bank of China (Asia) Limited; Company (subject of Winding Up): LT Commercial Limited (In Creditors’ Voluntary Liquidation); Proposed Provisional Liquidator: Mr So Man Chun; Proposed Provisional Liquidator: Mr Jong Yat Kit; Official Receiver (respondent/interested Party): Official Receiver; Current Liquidators / Creditor: Trustee in bankruptcy of Mr Yang Longfei; Creditor / Former Chairman: Mr Yang Longfei
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
15 September 2021
Case Number
HCCW261/2021
Procedural Posture
Companies Winding Up (compulsory Liquidation Petition) / Interim Application for Appointment of Provisional Liquidators; Petition Listed for Hearing 29 September 2021
Outcome
Provisional liquidators appointed and court leave granted under s262B(3)(a) to permit appointment despite technical creditor status of trustees
Legal Topics
Provisional Liquidators, Winding Up Petition, Conflict of Interest in Appointments, Cross Border Insolvency, Leave Under S262 B(3)(a)
Source Language
EN
Company Law Insolvency and Bankruptcy Civil Procedure Provisional Liquidators Winding Up Petition Conflict of Interest in Appointments Cross Border Insolvency Leave Under S262 B(3)(a)

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Parties

Industrial and Commercial Bank of China (Asia) Limited

Petitioner (creditor)

LT Commercial Limited (In Creditors’ Voluntary Liquidation)

Company (subject of Winding Up)

Mr So Man Chun

Proposed Provisional Liquidator

Mr Jong Yat Kit

Proposed Provisional Liquidator

Official Receiver

Official Receiver (respondent/interested Party)

Trustee in bankruptcy of Mr Yang Longfei

Current Liquidators / Creditor

Mr Yang Longfei

Creditor / Former Chairman

Procedural Posture

Companies Winding Up (compulsory Liquidation Petition) / Interim Application for Appointment of Provisional Liquidators; Petition Listed for Hearing 29 September 2021

Legal Issues

  1. 1 Whether provisional liquidators should be appointed to enable seamless continuation of insolvency and facilitate Mainland actions
  2. 2 Whether leave under s262B(3)(a) is required and should be granted where proposed appointees are technically creditors by virtue of bankruptcy vesting
  3. 3 Whether a small creditor interest gives rise to a material conflict preventing appointment

Ratio Decidendi

The court granted the application to appoint Mr So Man Chun and Mr Jong Yat Kit as provisional liquidators and expressly granted leave under s262B(3)(a) because practical necessity to avoid operational hiatus and to facilitate Mainland proceedings outweighed any theoretical conflict; the trustees’ creditor status was technical given the very small debt (approx. 0.24%), and on that basis no material conflict was found to preclude appointment (following the approach in Re Gold Finance).

Court Disposition

Provisional liquidators appointed and court leave granted under s262B(3)(a) to permit appointment despite technical creditor status of trustees

Orders

  • Appoint Mr So Man Chun and Mr Jong Yat Kit as provisional liquidators of LT Commercial Limited
  • Grant leave pursuant to section 262B(3)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) to permit the trustees (technically creditors) to be appointed provisional liquidators