WATSON ENVIRONMENTAL MANAGEMENT LTD

bjbj HCCW 2/2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES (WINDING-UP) NO. 2 OF 2009 ____________ IN THE MATTER of WATSON ENVIRONMENTAL MANAGEMENT LIMITED and IN THE MATTER of the Companies Ordinance, Cap. 32, Laws of Hong Kong ____________ Before: Hon Kwan J in Chambers Date of Hearing: 5 February 2009 Date of Decision: 5 February 2009 ______________ D E C I S I O N ______________ I have before me an application by Watson Environmental Management Limited ( the Company ) under section 182 of the Companies Ordinance, Cap. 32. The summons was issued on 30 January 2009. A creditor s petition has been presented to wind up the Company on 2 January 2009. The application is made on an urgent basis. The Company seeks an order that notwithstanding the presentation of the petition, the cheques set out in Schedule 1 as amended may be deposited and the payments set out in Schedule 2 may be made out of the Company s bank accounts with the Standard Chartered Bank, and that in the event a winding-up order is made on the petition, the transactions set out in Schedules 1 and 2 shall not be avoided by section 182. I understand from Mr Roy Lau, who appears for the Company today, that the Company will make a further application to the court under section 182 for leave to deposit and withdraw moneys from its bank accounts in the ordinary course of its business. The transactions the Company seeks to be validated in the application today relate only to payments received and expenses incurred in the last two months. The Company is engaged in providing cleaning services to various commercial buildings and shopping arcades in Hong Kong. If it cannot pay the staff and workers on time, the Company will not be able to perform its contracts. This will seriously affect the continuous inflow of income to the Company, followed by claims from customers for failure to perform the contracts, and customers may withhold payments due to the Company. I have considered the management accounts of the Company placed before the court, they are made up to November 2008. I note from the accounts that monthly net sale figures are over $2.6 million. The total gross income amounted to $4 million, and the total net income for the period was about $1 million. Given these figures, it seems to me that the Company is prima facie solvent, and has been actively trading. It would be in the interests of the Company and its creditors that the payments sought to be validated for the last two months should be paid. I have considered the submissions advanced on behalf of the petitioning creditor. It does not seem to me that any purpose would be served by adjourning the application for today, as I am satisfied the Company is prima facie solvent on the available evidence. I note that some of the Company s customers are well-established companies, that out of the account receivables of over $4 million, cheques of about $2 million have been received by the Company from its customers. Furthermore, the Company s shareholder Watson Environmental (China) Services Limited is to inject $700,000 into the Company by a cheque which is to be deposited, as the Company has not been able to collect two cheques in the total sum of $1.1 million from two established customers due to the intervening holidays. After all the cheques have been cleared, and all the payments in Schedule 2 have been made, there would be a cash balance of about $132,000 in the bank accounts of the Company. I have no reason to think that the Company will not continue to receive further payments by cheque from its customers in respect of the accounts receivable. In these circumstances, it does not appear to me that the creditors position would be jeopardised. The Official Receiver has taken a neutral position in this application. I therefore make an order in terms of paragraphs 1 and 2 of the summons. As I have indicated earlier, the cheques set out in Schedule 1 are to be amended in the way as set out in the affirmation filed by the Company on 4 February 2009. I make an order that the costs of this application are to be in the cause of the petition. (S. Kwan) Judge of the Court of First Instance High Court Mr Lam Chin Ching Gary, instructed by Messrs Haldanes, for the Petitioner Mr Roy K Y Lau, instructed by Messrs Li, Wong, Lam & W.I. Cheung, for the Respondent The Official Receiver, attendance excused PAGE - A B C D E F G H I J K L M N O P Q R S T U V A B C 1udk 1udk i$&`G 5<>| r "d HCCW.dot setup Microsoft Word 9.0 Title Microsoft Word Document MSWordDoc Word.Document.8