CONFIDENTIAL #
XCCI(77)2
The Petition for winding up
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On 31st March 1977, following the failure of the Hong Kong Resort Company to meet salary and wage payments, the Director of Legal Aid, on behalf of unpaid employees, lodged a petition in the Supreme Court seeking the winding up of the Company. On 1st April the Court appointed the Official Receiver as provisional liquidator (with the powers of liquidator) pending a full hearing of the petition on 3rd May 1977. At about the same time, Mr John Lok gave notice calling in the mortgage, which notice expired on 6th April. The Company was unable to comply, and Lok has shown interest in exercising his power of sale. In a letter addressed to the Secretary for the New Territories on 13th April 1977, solicitors acting on his behalf have asked if the conditions of his undertaking, which require inter alia payment of the outstanding balance of premium in full upon sale, can be waived. Considerable interest has been displayed by other possible purchasers of the property, and there is no reason to believe a sale could not be successfully concluded. In addition, some interest has been shown by in the acquisition of the shares in the Hong Kong Resort Company. The significance of a purchase of the shares lies in the fact that no consent would be required (assuming that the winding up is stayed) and the instalment basis for the payment of premium would remain undisturbed.
Government's Position
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In view of the scale of the Discovery Bay Project, the Govern- ment wishes to ensure that its development meets Government's specifi- cations and is either undertaken by a developer approved by Government or (possibly) is brought under direct Government control. Government's ability to intervene, however, depends largely upon the disinterest of the parties involved (such as the mortgagee, other creditors of the Company, the Company itself and the liquidator) in enforcing their legal rights. Therefore, the Government could not embark on any particular course of action with absolute certainty as to the final outcome. Never- theless, the main courses open to it are discussed in paragraph 6.
The Liquidator
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In considering what Government could do, the position of the liquidator must also be borne in mind. At the first meetings of creditors and shareholders in the course of winding up proceedings, the Official Receiver may or may not be confirmed as liquidator. Such meetings will not take place until several weeks after the hearing of the petition on 3rd May 1977, and then only if a winding up order is made. The liquidator's function will be to achieve the best possible outcome for the creditors and shareholders of the Company. He is therefore obliged to ensure that any sale of the Company's property is at fair
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