Re Chi Sun Co. Ltd.

Re Chi Sun Co. Ltd.

A validation order under s.182 was granted: payments into or out of the Company’s accounts with the Bank of East Asia and dispositions of property made in the ordinary course of business for proper value between presentation of the petition and its termination (or determination of any motion to strike out) are not void by virtue of s.182 in the event of a subsequent winding‑up, and the court will not require a pre‑approved schedule of individual payees and amounts; the bank is under no obligation to verify the ordinary course or market value of transactions.

Citation
Re Chi Sun Co. Ltd.
Parties
Petitioner: Petitioner; Company (subject): Chi Sun Company Limited; 1st Respondent: 1st Respondent; 2nd Respondent: 2nd Respondent; 3rd Respondent: 3rd Respondent; Bank (interested Party): Bank of East Asia Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
22 March 2002
Case Number
HCCW175/2002
Procedural Posture
Companies (winding Up) / Interlocutory Application for Validation Order Under S.182
Outcome
Validation order granted (interlocutory)
Legal Topics
Validation Order, Winding Up Petition, Bank Account Freezes, Ordinary Course of Business
Source Language
EN
Company Law Insolvency Civil Procedure Validation Order Winding Up Petition Bank Account Freezes Ordinary Course of Business

Case Brief

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Parties

Petitioner

Petitioner

Chi Sun Company Limited

Company (subject)

1st Respondent

1st Respondent

2nd Respondent

2nd Respondent

3rd Respondent

3rd Respondent

Bank of East Asia Limited

Bank (interested Party)

Procedural Posture

Companies (winding Up) / Interlocutory Application for Validation Order Under S.182

Legal Issues

  1. 1 Whether the court should validate payments into or out of the company bank accounts and dispositions of property in the ordinary course of business between presentation of the petition and its termination under s.182 of the Companies Ordinance
  2. 2 Whether the court should require a schedule of payees and amounts to be approved before validation
  3. 3 Whether the bank is obliged to verify that transactions are in the ordinary course or represent full market value

Ratio Decidendi

A validation order under s.182 was granted: payments into or out of the Company’s accounts with the Bank of East Asia and dispositions of property made in the ordinary course of business for proper value between presentation of the petition and its termination (or determination of any motion to strike out) are not void by virtue of s.182 in the event of a subsequent winding‑up, and the court will not require a pre‑approved schedule of individual payees and amounts; the bank is under no obligation to verify the ordinary course or market value of transactions.

Court Disposition

Validation order granted (interlocutory)

Orders

  • Notwithstanding the presentation of the petition, payments made into or out of the bank accounts of Chi Sun Company Limited with the Bank of East Asia Limited in the ordinary course of business and dispositions of the property of the Company made in the ordinary course of business for proper value between the date...