CHAN DAT CHAN AND ANOTHER v. HEEPSON HOLDINGS LTD.

CHAN DAT CHAN AND ANOTHER v. HEEPSON HOLDINGS LTD.

The Court granted an interim validation order: payments into or out of the company’s bank accounts and dispositions of company property made in the ordinary course of business for proper value between presentation of the petition and judgment (or determination of any striking-out motion if later) will not be void by virtue of Section 182, subject to the bank having no obligation to verify ordinary course status or market value, and on the condition that all company cheques be executed either by Chan Dat Chan and Yick Sun Kit jointly or by Lau Ngan Chai and Lam Sei Pui jointly; the Court refused to impose the proposed management/departmental continuity condition as impracticable to police.

Citation
CHAN DAT CHAN AND ANOTHER v. HEEPSON HOLDINGS LTD.
Parties
Applicant/shareholder/director: Chan Dat Chan; Applicant/shareholder/director: Lau Ngan Chai; Petitioner/shareholder/director: Yick Sun Kit; Petitioner/shareholder/director: Lam Sei Pui; Company: Heepson Holdings Limited; Official Receiver: Official Receiver (represented by Mr Glen)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
5 October 2000
Case Number
HCCW859/2000
Procedural Posture
Companies Winding Up Proceedings / Interlocutory Application for Validation Order Pending Hearing of Petition
Outcome
Validation order granted (interim) with conditions
Legal Topics
Winding Up, Unfair Prejudice (s.168 A), Validation of Transactions, Avoidance of Dispositions (s.182), Shareholder Dispute
Source Language
EN
Companies Law Insolvency Law Corporate Governance Winding Up Unfair Prejudice (s.168 A) Validation of Transactions Avoidance of Dispositions (s.182) Shareholder Dispute

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Parties

Chan Dat Chan

Applicant/shareholder/director

Lau Ngan Chai

Applicant/shareholder/director

Yick Sun Kit

Petitioner/shareholder/director

Lam Sei Pui

Petitioner/shareholder/director

Heepson Holdings Limited

Company

Official Receiver (represented by Mr Glen)

Official Receiver

Procedural Posture

Companies Winding Up Proceedings / Interlocutory Application for Validation Order Pending Hearing of Petition

Legal Issues

  1. 1 Whether payments and dispositions in the ordinary course of business between presentation of a winding-up petition and judgment are voidable under Section 182
  2. 2 Whether conditions sought by the petitioners should be imposed as part of the validation order (joint operation of bank accounts; continuation of management/departmental arrangements)

Ratio Decidendi

The Court granted an interim validation order: payments into or out of the company’s bank accounts and dispositions of company property made in the ordinary course of business for proper value between presentation of the petition and judgment (or determination of any striking-out motion if later) will not be void by virtue of Section 182, subject to the bank having no obligation to verify ordinary course status or market value, and on the condition that all company cheques be executed either by Chan Dat Chan and Yick Sun Kit jointly or by Lau Ngan Chai and Lam Sei Pui jointly; the Court refused to impose the proposed management/departmental continuity condition as impracticable to police.

Court Disposition

Validation order granted (interim) with conditions

Orders

  • Payments into or out of the company bank accounts in the ordinary course of business and dispositions of company property for proper value between presentation of the petition (16 September 2000) and the date of judgment of the petition, or the hearing and determination of any motion to strike out the petition,...
  • The relevant bank shall be under no obligation to verify whether any transaction is in the ordinary course of business or represents full market value