RE FIVE STAR WINE LTD

RE FIVE STAR WINE LTD

The court exercised its discretion under s209(1) to grant a conditional stay of the winding-up because the sole remaining creditor (the Petitioner) and the Provisional Liquidators consented and the proposed conditions (payment of the petition debt with interest, additional costs to the petitioner, and security of HK$150,000 for liquidators' and Official Receiver's expenses) adequately protected creditors and the liquidator; the stay takes effect only upon compliance with the specified payments and does not allow the company to resume trading until the conditions are met.

Citation
RE FIVE STAR WINE LTD
Parties
Company (debtor): Five Star Wine Ltd; Petitioner (creditor): Petitioner (former employee); Provisional Liquidators: Kenny Tam & Shum Lap Chi (Messrs Kenny Tam & Co.); Contributories (applicants): Contributories (including Mr Fong Kit Jack)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
1 April 2003
Case Number
HCCW1208/2002
Procedural Posture
Companies (winding Up) / Application for Conditional Stay of Execution of Winding Up Order Made 15 January 2003
Outcome
Stay of winding-up proceedings granted conditionally
Legal Topics
Winding Up, Stay of Proceedings, Provisional Liquidators, Security for Costs, Priority of Liquidation Expenses
Source Language
EN
Company Law Insolvency Law Civil Procedure Winding Up Stay of Proceedings Provisional Liquidators Security for Costs Priority of Liquidation Expenses

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Parties

Five Star Wine Ltd

Company (debtor)

Petitioner (former employee)

Petitioner (creditor)

Kenny Tam & Shum Lap Chi (Messrs Kenny Tam & Co.)

Provisional Liquidators

Contributories (including Mr Fong Kit Jack)

Contributories (applicants)

Procedural Posture

Companies (winding Up) / Application for Conditional Stay of Execution of Winding Up Order Made 15 January 2003

Legal Issues

  1. 1 Whether the court should exercise its discretion under s209(1) to stay the winding-up proceedings
  2. 2 Whether a conditional stay is appropriate and what terms are necessary to protect creditors and the liquidator
  3. 3 Whether the company would be solvent upon payment of debts and whether contributors' undertakings suffice to extinguish company liabilities

Ratio Decidendi

The court exercised its discretion under s209(1) to grant a conditional stay of the winding-up because the sole remaining creditor (the Petitioner) and the Provisional Liquidators consented and the proposed conditions (payment of the petition debt with interest, additional costs to the petitioner, and security of HK$150,000 for liquidators' and Official Receiver's expenses) adequately protected creditors and the liquidator; the stay takes effect only upon compliance with the specified payments and does not allow the company to resume trading until the conditions are met.

Court Disposition

Stay of winding-up proceedings granted conditionally

Orders

  • HK$150,000 to be paid to the Provisional Liquidators for deposit into the client account of Messrs. Kenny Tam & Co. on or before 15 April 2003 as security for costs, charges and expenses of the liquidation including fees of the Provisional Liquidators and Official Receiver
  • Payment to the Petitioner on or before 31 May 2003 of HK$198,451.72 plus HK$39.07 per day from 1 April 2003 until payment, and an additional sum of HK$43,985 for the Petitioner's costs of the winding-up proceedings