Hong Kong Case Law: Decisions & Judgments

Topic

Preferential payments

Legal area

Court

28 May 2021

THE JOINT & SEVERAL LIQUIDATORS OF COLOR BRIDGE PRINTING & PACKAGING CO LTD (IN LIQUIDATION) v. HUNG CHOI CONSTRUCTION LTD

Citation

[2021] HKCFI 1483
Court

Court of First Instance
Case number

HCCW81/2018

The judge found on the balance of probabilities that Hitachi Capital was owner and that, under the lease, title passed to the Company on settlement of the lease and then immediately to the Respondent, engaging s182; applying the governing principles the court declined to grant validation because the transaction, while not inherently objectionable, engaged s182 and the Respondent delayed and failed to take steps to obtain validation, causing prejudice and escalation of costs; therefore the transfer was declared void and the Vehicle ordered returned to the Liquidators.
9 Feb 2017

OSMAN MOHAMMED ARAB AND WONG KWOK KEUNG, THE JOINT AND SEVERAL LIQUIDATORS OF KAM TOYS & NOVELTY MANUFACTURING LTD (IN CREDITORS’ VOLUNTARY LIQUIDATION) v. CASHBOX CREDIT SERVICES LTD

Citation

OSMAN MOHAMMED ARAB AND WONG KWOK KEUNG, THE JOINT AND SEVERAL LIQUIDATORS OF KAM TOYS & NOVELTY MANUFACTURING LTD (IN CREDITORS’ VOLUNTARY LIQUIDATION) v. CASHBOX CREDIT SERVICES LTD
Court

Court of First Instance
Case number

HCMP1908/2016

Although the Company was insolvent at the time of the Payment, the Applicants failed to prove that the directors were influenced by a subjective desire to improve the Respondent's position in event of the Company's insolvent liquidation; therefore the Payment was not an unfair preference and the Originating Summons is dismissed.
30 Apr 2009

RE FEGARIDO SALVADOR F

Citation

RE FEGARIDO SALVADOR F
Court

Court of First Instance
Case number

HCB850/2005

The court found proven failures to cooperate, unsatisfactory post-bankruptcy conduct including breach of s43A(6), unauthorised receipt of MPF benefits and preferential payments to a spouse's creditors, and unreconciled financial discrepancies; these establish valid objections under s30A(4)(c),(d) and (h) and justify suspending the automatic discharge. The court exercised its discretion to suspend discharge for 2 years from 14 March 2009.
12 Oct 2007

FRED LEE AND ANOTHER v. WONG HING WAH MICHAEL

Citation

FRED LEE AND ANOTHER v. WONG HING WAH MICHAEL
Court

Court of First Instance
Case number

HCB26018/2002

The court held both impugned acts amounted to unsatisfactory pre-bankruptcy conduct under s30A(4)(d): taking further credit while already unable to meet obligations and making preferential repayments to family/friend shortly before petitioning for bankruptcy. Balancing the rehabilitative policy, the bankrupt's post-bankruptcy cooperation and lack of contributions, the court exercised its discretion to suspend the automatic discharge for four months as a mark of disapproval of the serious preferential repayments; thus s30A(3) applied and a limited suspension was ordered.
8 Sept 2004

RE FAR EAST STRUCTURAL STEELWORK ENGINEERING LTD (IN LIQUIDATION)

Citation

RE FAR EAST STRUCTURAL STEELWORK ENGINEERING LTD (IN LIQUIDATION)
Court

Court of First Instance
Case number

HCCW354/2001

The payments were validated because they were made honestly, constituted steps to preserve or realise the company's assets and to pursue a compromise beneficial to creditors generally, and there was insufficient evidence that the payments unfairly preferred some creditors or were not in the ordinary course of business; accordingly the liquidators' summons was dismissed.
21 Feb 2002

THE JOINT AND SEVERAL LIQUIDATORS OF HANGLY METAL BUTTON & BUCKLE FACTORY LTD. (IN LIQUIDATION) v. CHUN TAT METAL LTD.

Citation

THE JOINT AND SEVERAL LIQUIDATORS OF HANGLY METAL BUTTON & BUCKLE FACTORY LTD. (IN LIQUIDATION) v. CHUN TAT METAL LTD.
Court

Court of First Instance
Case number

HCCW773/2000

Payment of HK$118,376 made by the company after the deemed commencement of the winding-up is void under section 182 of the Companies Ordinance; the respondent is ordered to repay that sum to the liquidators within eight weeks and to pay costs of HK$5,000 on a gross basis.
29 May 2001

RE WING HONG WOO CO LTD

Citation

RE WING HONG WOO CO LTD
Court

Court of Appeal
Case number

CACV1004/2000

The Court held the payments were not fraudulent preferences because (1) several payments were not payments by the company but by third parties or by a related company pursuant to arrangements to discharge guarantor liabilities, (2) the payments resulted from legitimate enforcement of guarantees and security (including release and re‑mortgage of third‑party property) and did not give the bank a preference over other creditors, and (3) proceeds related to trust receipts were de facto security of the bank such that the company had no free assets to prefer; accordingly the liquidator's claim fail…
7 Jan 2000

RE LINFA INDUSTRIAL CO. LTD.

Citation

RE LINFA INDUSTRIAL CO. LTD.
Court

Court of First Instance
Case number

HCCW1049/1999

The applications were dismissed because the applicants failed to discharge the onus: evidence showed negative net assets and insufficient, unsubstantiated evidence that receivables, compensation or restructuring would produce timely recoveries or profitable trading; accordingly the court was not satisfied that the companies were solvent or that continued day-to-day trading would be for the benefit of creditors as a class.
7 Jan 2000

RE WAH LEE RESOURCES CO. LTD.

Citation

RE WAH LEE RESOURCES CO. LTD.
Court

Court of First Instance
Case number

HCCW1047/1999

The applications were dismissed because the applicants failed to demonstrate solvency or to show that continued day‑to‑day trading would be for the benefit of the companies' creditors as a class, relying on the KPMG review and absence of credible evidence of recovery, restructure or investor support.
27 Oct 1998

IN RE SINOAMERICAN TELECOM INC.

Citation

IN RE SINOAMERICAN TELECOM INC.
Court

Court of First Instance
Case number

HCCW329/1998

Because material facts were in dispute, including allegations that the petition was an abuse and that the provisional liquidators and lending arrangements created an ulterior purpose, the court exercised its discretion to refuse to make a winding-up order at this stage and ordered discovery and cross-examination; no urgency or irremediable prejudice to the petitioning creditor was shown to justify immediate winding-up.