WINBLESS INC v. CENTRAL BILLION INC AND OTHERS

WINBLESS INC v. CENTRAL BILLION INC AND OTHERS

The companies are manifestly solvent with substantial reserves; the proposed distributions are within the directors' powers and the reasons given are such that an intelligent and honest person could hold them to be in the companies' interests; no compelling evidence was shown that the distributions would injure the companies or prejudice creditors; accordingly the court ordered distribution of sale proceeds according to each company's shareholding and directed costs be paid from company assets.

Citation
WINBLESS INC v. CENTRAL BILLION INC AND OTHERS
Parties
Petitioner (hccw 371/2011): Winbless Inc; Petitioner (hccw 373/2011): Fancymind Inc; 1st Respondent (hccw 371/2011); 2nd Respondent (hccw 373/2011): Central Billion Inc; 2nd Respondent (hccw 371/2011); 3rd Respondent (hccw 373/2011): Amazing Inc; 3rd Respondent (hccw 371/2011); 4th Respondent (hccw 373/2011): Bright Star Corporation; 4th Respondent (hccw 371/2011); 5th Respondent (hccw 373/2011): Topedge Inc; 5th Respondent (hccw 371/2011); 6th Respondent (hccw 373/2011): Welljoy Inc; 6th Respondent (hccw 371/2011); Subject Company: Grand Textile Company, Limited; 1st Respondent (hccw 373/2011): Fako International Corporation; 7th Respondent (hccw 373/2011); Subject Company: International Textile Company, Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
16 December 2013
Case Number
HCCW371/2011
Procedural Posture
Companies (winding Up) Petitions (contributory) HCCW 371/2011 and HCCW 373/2011 / Consequential Hearing Following Validation Orders to Determine Distribution of Sale Proceeds
Outcome
Distribution of the sale proceeds ordered in accordance with the respective companies' shareholding structures; costs to be paid out of the assets of the respective companies and taxed if not agreed
Legal Topics
Winding Up, Validation Orders Under Section 182, Distribution of Sale Proceeds, Directors' Powers and Duties, Shareholder Disputes, Solvency
Source Language
EN
Company Law Insolvency Law Winding Up Validation Orders Under Section 182 Distribution of Sale Proceeds Directors' Powers and Duties Shareholder Disputes Solvency

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Parties

Winbless Inc

Petitioner (hccw 371/2011)

Fancymind Inc

Petitioner (hccw 373/2011)

Central Billion Inc

1st Respondent (hccw 371/2011); 2nd Respondent (hccw 373/2011)

Amazing Inc

2nd Respondent (hccw 371/2011); 3rd Respondent (hccw 373/2011)

Bright Star Corporation

3rd Respondent (hccw 371/2011); 4th Respondent (hccw 373/2011)

Topedge Inc

4th Respondent (hccw 371/2011); 5th Respondent (hccw 373/2011)

Welljoy Inc

5th Respondent (hccw 371/2011); 6th Respondent (hccw 373/2011)

Grand Textile Company, Limited

6th Respondent (hccw 371/2011); Subject Company

Fako International Corporation

1st Respondent (hccw 373/2011)

International Textile Company, Limited

7th Respondent (hccw 373/2011); Subject Company

Procedural Posture

Companies (winding Up) Petitions (contributory) HCCW 371/2011 and HCCW 373/2011 / Consequential Hearing Following Validation Orders to Determine Distribution of Sale Proceeds

Legal Issues

  1. 1 Whether court should sanction distribution of sale proceeds by solvent companies subject to contributory winding‑up petitions
  2. 2 Whether the directors' disposition falls within their powers and is one an intelligent and honest person could hold was in the company's interests
  3. 3 Whether distribution would prejudice creditors or impede payment of winding‑up expenses

Ratio Decidendi

The companies are manifestly solvent with substantial reserves; the proposed distributions are within the directors' powers and the reasons given are such that an intelligent and honest person could hold them to be in the companies' interests; no compelling evidence was shown that the distributions would injure the companies or prejudice creditors; accordingly the court ordered distribution of sale proceeds according to each company's shareholding and directed costs be paid from company assets.

Court Disposition

Distribution of the sale proceeds ordered in accordance with the respective companies' shareholding structures; costs to be paid out of the assets of the respective companies and taxed if not agreed

Orders

  • Distribution of sales proceeds of Grand Textile Company, Limited in accordance with its shareholding structure
  • Distribution of sales proceeds of International Textile Company, Limited in accordance with its shareholding structure