CONFIDENTIAL
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XCCI(77)2
market price and that any sale which does not achieve this is set aside. Government's own most recent valuation of the land is (as indicated in paragraph 1) $100 million; it is unlikely that it could offer less than this if it wished to purchase the land itself, although it could take into account the balance of premium outstanding. Any sale, other than an open one by tender or auction, might be regarded as unsatisfactory by the creditors and shareholders (and therefore the liquidator), unless its bona fides were clearly established.
Possible Courses of Action
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The following is an outline and assessment of three courses open to Government:
Course A
Mr John Lok exercises his power of sale; Government agrees to waive lump sum settlement of the outstanding premium on condition that selection of the purchaser is subject to Govern- ment approval. Government could also either insist that all development conditions be adhered to or impose revised conditions to obtain greater control over the development. The normal requirement that, after paying the sum due to himself, Mr John Lok would hand over to the liquidator the remaining proceeds from the sale would apply. This assumes that Mr John Lok continues to want to sell and succeeds in doing so. No financial outlay by Government would be required. Subsequent failure of the project could be followed by re-entry. The liquidator might have to challenge a sale by Mr Lok if it could be established that it was not bona fide.
Course B
Mr John Lok exercises his power of sale but Government insists on payment of the outstanding balance of premium in full under the terms of his undertaking. Government then offers to buy the land (through the Colonial Treasurer Incorporated) at a fair market price, though this does not mean that it will acquire the land if there are other pros - pective purchasers who make better offers.
Course C
Government resumes the Discovery Bay land under the Crown Lands Resumption Ordinance (Chapter 124). Although, the Ordinance permits the Governor in Council to declare any resumption of land to be for a public purpose, the definition of a 'public purpose 'and the acquisition of private land without any specific public project in view
CONFIDENTIAL #2
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