Company law — liquidators — ex parte application in writing for appointment — failure to disclose finding of contempt against one of three proposed liquidators — whether new insolvency practitioners to be appointed
Company law — compulsory winding-up — regulating order — order dispensing with first meeting of creditors
The Court declined to deal in writing with the ex parte application of T, H and K, the provisional liquidators (‘PLs’) of C, a company, for inter alia their appointment as liquidators, because it did not mention that T had been found in HCMP 450/2016 to be in contempt of court. Following the subsequent partial overturning of that finding by the Court of Appeal, T was fined $300,000, although after the written application was made. PLs subsequently issued a summons seeking a regulating order; an order dispensing with the first meeting of creditors because there was a large number of them; the appointment of H and K only as liquidators; and a committee of inspection. The Official Receiver raised no objection.
Held, making the orders sought, that:
- Although the finding of contempt against T did not fall within s. 262D of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and so did not need to be included in the s. 262C disclosure statement, H and K should have appreciated the duty on an ex parte application to make full and frank disclosure required the finding to be brought expressly to the Court’s attention. (See paras. 9–12.)
- Although H and K had failed in their duties to the Court, they would be appointed as liquidators. On balance, the liquidation of was so far advanced that replacing PLs with new insolvency practitioners at this stage would incur potentially significant additional costs, to the prejudice of the interests of the unsecured creditors for no real benefit. (See para. 13.)
This was an application by summons for the appointment of two of three provisional liquidators of the subject company, a regulating order, an order dispensing with the first meeting of creditors and for a committee of inspection. The facts are set out in the judgment.