PATRICK COWLEY AND ANOTHER (The Joint and Several Trustees in Bankruptcy of the Property of the Bankrupt) v. ALL POWERFUL HOLDING LTD AND ANOTHER

PATRICK COWLEY AND ANOTHER (The Joint and Several Trustees in Bankruptcy of the Property of the Bankrupt) v. ALL POWERFUL HOLDING LTD AND ANOTHER

The court granted Chabra (freezing) injunctions against APHL and APIL and limited disclosure against APIL because the Trustees established a good arguable case that the 2015 share transfer was at an undervalue and made with intent to defraud creditors, that Mr Lau retained substantive control of the trust and companies creating a real risk of dissipation, and the balance of convenience favoured preserving the assets for creditors; the trustees must give a cross-undertaking limited to HK$40,000,000, indemnified by HSBC; the corporate veil need not be pierced at this stage and lawful winding up procedures can render assets available to creditors.

Citation
[2018] HKCFI 1802
Parties
Applicant Joint and Several Trustee in Bankruptcy: Patrick Cowley; Applicant Joint and Several Trustee in Bankruptcy: Wong Wing Sze Tiffany; 1st Respondent: All Powerful Holding Limited; 2nd Respondent: All Powerful Investment Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
1 August 2018
Case Number
HCB104/2017
Procedural Posture
Bankruptcy Proceedings / Application for Interim Chabra (freezing/mareva) Injunctions and Disclosure Orders; Interlocutory Hearing
Outcome
Injunctions granted against All Powerful Holding Limited and All Powerful Investment Limited; disclosure orders granted against All Powerful Investment Limited; trustees required to give cross-undertaking limited to HK$40,000,000 indemnified by HSBC; directions summons dismissed; costs in the cause.
Legal Topics
Transaction at Undervalue, Disposition to Defraud Creditors, Chabra Injunction Against Non Party, Lifting/piercing Corporate Veil, Disclosure Orders, Undertaking in Damages, Balance of Convenience
Source Language
EN
Bankruptcy Injunctions Company Law Trusts Fraudulent Conveyance Transaction at Undervalue Disposition to Defraud Creditors Chabra Injunction Against Non Party +4 more

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Parties

Patrick Cowley

Applicant Joint and Several Trustee in Bankruptcy

Wong Wing Sze Tiffany

Applicant Joint and Several Trustee in Bankruptcy

All Powerful Holding Limited

1st Respondent

All Powerful Investment Limited

2nd Respondent

Procedural Posture

Bankruptcy Proceedings / Application for Interim Chabra (freezing/mareva) Injunctions and Disclosure Orders; Interlocutory Hearing

Legal Issues

  1. 1 Whether the 20 January 2015 share transfer was a transaction at an undervalue
  2. 2 Whether the share transfer was a disposition of property with intent to defraud creditors
  3. 3 Whether a Chabra injunction against APHL and APIL (non-cause of action defendants) was justified

Ratio Decidendi

The court granted Chabra (freezing) injunctions against APHL and APIL and limited disclosure against APIL because the Trustees established a good arguable case that the 2015 share transfer was at an undervalue and made with intent to defraud creditors, that Mr Lau retained substantive control of the trust and companies creating a real risk of dissipation, and the balance of convenience favoured preserving the assets for creditors; the trustees must give a cross-undertaking limited to HK$40,000,000, indemnified by HSBC; the corporate veil need not be pierced at this stage and lawful winding up procedures can render assets available to creditors.

Court Disposition

Injunctions granted against All Powerful Holding Limited and All Powerful Investment Limited; disclosure orders granted against All Powerful Investment Limited; trustees required to give cross-undertaking limited to HK$40,000,000 indemnified by HSBC; directions summons dismissed; costs in the cause.

Orders

  • Costs ordered to be in the cause