IN RE GOODWAY LTD.

IN RE GOODWAY LTD.

Because the proposed liquidators accepted indemnity terms (notably a clause requiring the guarantor's prior approval for drawing remuneration and a clause effectively requiring prior approval for exercise of powers) that created a real risk and appearance of loss of independence and control by a single major creditor, the court refused their appointment and ordered the Official Receiver to continue as liquidator; a Committee of Inspection was appointed; costs were ordered nisi against Pirelli Cables Ltd.

Citation
IN RE GOODWAY LTD.
Parties
Applicant / Provisional Liquidator: Official Receiver; Company (subject of Winding Up): Goodway Limited; Petitioning Creditor: Pirelli Cables Ltd; Creditor: Hong Bridge Trading Co. Ltd.; Creditor / Contributory: Yook Tong Electric Co. Ltd.; Creditor / Solicitors: W.K. To & Co.; Contributory / Shareholder: TE Holding Corporation
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 January 1999
Case Number
HCCW162/1998
Procedural Posture
Companies Winding Up Proceedings / Summons Under S.206 and Rule 45 for Determination Between Creditors' and Contributories' Meetings on Appointment of Liquidators and Committee of Inspection
Outcome
Official Receiver to continue as liquidator; Committee of Inspection appointed; order nisi for costs against Pirelli Cables Ltd.
Legal Topics
Appointment of Liquidators, Committee of Inspection, Conflict of Interest, Indemnities to Liquidators, Remuneration of Officeholders
Source Language
EN
Company Law Insolvency Law Civil Procedure Appointment of Liquidators Committee of Inspection Conflict of Interest Indemnities to Liquidators Remuneration of Officeholders

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Parties

Official Receiver

Applicant / Provisional Liquidator

Goodway Limited

Company (subject of Winding Up)

Pirelli Cables Ltd

Petitioning Creditor

Hong Bridge Trading Co. Ltd.

Creditor

Yook Tong Electric Co. Ltd.

Creditor / Contributory

W.K. To & Co.

Creditor / Solicitors

TE Holding Corporation

Contributory / Shareholder

Procedural Posture

Companies Winding Up Proceedings / Summons Under S.206 and Rule 45 for Determination Between Creditors' and Contributories' Meetings on Appointment of Liquidators and Committee of Inspection

Legal Issues

  1. 1 Whether proposed liquidators who accepted an indemnity and clauses requiring creditor approval remained independent and free of conflict
  2. 2 Whether the Official Receiver should continue as liquidator
  3. 3 Whether a Committee of Inspection should be appointed

Ratio Decidendi

Because the proposed liquidators accepted indemnity terms (notably a clause requiring the guarantor's prior approval for drawing remuneration and a clause effectively requiring prior approval for exercise of powers) that created a real risk and appearance of loss of independence and control by a single major creditor, the court refused their appointment and ordered the Official Receiver to continue as liquidator; a Committee of Inspection was appointed; costs were ordered nisi against Pirelli Cables Ltd.

Court Disposition

Official Receiver to continue as liquidator; Committee of Inspection appointed; order nisi for costs against Pirelli Cables Ltd.

Orders

  • Official Receiver to continue as liquidator
  • Special managers to be appointed if and when considered necessary and provided financial resources are available