RE UNION V-TEX SHIRTS FACTORY LTD

RE UNION V-TEX SHIRTS FACTORY LTD

The court refused to set aside the transfer: although the companies were associated, the Official Receiver (through Mr Marr) had knowledge of the material facts and effectively adopted/ratified the sale by receiving payment and issuing confirmation; the applicant failed to prove the HK$5,500 price was so grossly undervalue or that undue influence or collusion rendered the transaction unconscionable, therefore the sale stands and the injunction is discharged.

Citation
RE UNION V-TEX SHIRTS FACTORY LTD
Parties
Company (subject): Union (V-Tex) Shirts Factory Limited; Transferee (purchaser): Codify Limited; Petitioner (creditor): Hong Kong & Shanghai Banking Corporation; Applicant (liquidator): Official Receiver / Provisional Liquidator (Registrar General, C.H. Marr)
Court
Court of First Instance
Jurisdiction
Hong Kong
Case Number
HCCW19/1975
Procedural Posture
Companies (winding Up) / Chambers Hearing on Application to Set Aside Transfer
Outcome
Application to set aside transfer dismissed; injunction discharged
Legal Topics
Voidable Transactions After Presentation of Petition, Liquidator's Power of Sale, Transactions at Undervalue, Arm's Length/association Between Parties, Ratification/rectification of Contracts
Source Language
EN
Company Law Insolvency Contract Law Commercial Law Property (quota Rights) Voidable Transactions After Presentation of Petition Liquidator's Power of Sale Transactions at Undervalue +2 more

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Parties

Union (V-Tex) Shirts Factory Limited

Company (subject)

Codify Limited

Transferee (purchaser)

Hong Kong & Shanghai Banking Corporation

Petitioner (creditor)

Official Receiver / Provisional Liquidator (Registrar General, C.H. Marr)

Applicant (liquidator)

Procedural Posture

Companies (winding Up) / Chambers Hearing on Application to Set Aside Transfer

Legal Issues

  1. 1 Whether the transfer of quota to Codify Limited was void as an executory contract presented after the winding-up petition
  2. 2 Whether the Official Receiver/Liquidator validly ratified or effectuated the sale by receiving payment and issuing receipt
  3. 3 Whether the sale at HK$5,500 was grossly undervalue such that the Liquidator could set it aside given the association between the companies

Ratio Decidendi

The court refused to set aside the transfer: although the companies were associated, the Official Receiver (through Mr Marr) had knowledge of the material facts and effectively adopted/ratified the sale by receiving payment and issuing confirmation; the applicant failed to prove the HK$5,500 price was so grossly undervalue or that undue influence or collusion rendered the transaction unconscionable, therefore the sale stands and the injunction is discharged.

Court Disposition

Application to set aside transfer dismissed; injunction discharged

Orders

  • Sale/transfer to Codify Limited not set aside; transfer stands
  • Costs awarded to the respondent (Codify Limited) to be paid out of the assets of Union (V-Tex)