In Re China Chuangyu International Investment (HK) Limited [2025] HKCFI 869, the Hong Kong Court of First Instance dismissed a winding-up petition against China Chuangyu International Investment (HK) Limited (Company) for want of prosecution.
The petitioner, Takson Sportswear Limited (Petitioner), presented its petition to wind up the Company on the basis that the Company had failed to repay a debt (Petition). However, apart from presenting the Petition and filing a verifying affidavit, the Petitioner did not take any active steps to prosecute the Petition. The Petitioner only advertised the Petition in newspaper and the HKSAR Gazette three months after presenting the Petition. Despite repeated reminders from the court, the Petitioner also failed to comply with the procedural requirements prescribed by the Companies (Winding-up) Rules (Cap. 32H) (CWUR) over a period of eight months. It did not answer the court’s requisitions and missed several hearings, which as a result had to be repeatedly adjourned.
This culminated in the court making an “unless order”, whereby unless the Petitioner answered all the court’s requisitions by a specified date, the Petitioner would be deemed to have elected not to further pursue the Petition. The Petitioner did not answer the requisitions by the deadline and failed to attend the next hearing. On that same day, the court issued a letter to the Petitioner’s solicitors, informing them that the Petition would be listed for hearing before a Companies Judge to consider its dismissal for want of prosecution. With no objections from the Petitioner, the Petition was dismissed for want of prosecution at the hearing.
Decision
In her Ladyship’s reasons for judgment, the Hon. Linda Chan J found the way in which the Petitioner and its solicitors had conducted the proceedings to be “unacceptable”. Her Ladyship emphasised that a winding-up petition is a draconian proceeding and should only be resorted to if a petitioner had a genuine wish to seek a winding-up order against a company.
A petitioner is expected to prosecute a winding-up petition with due dispatch. This includes answering requisitions raised by the court, complying with the procedural requirements under the CWUR, obtaining a registrar certificate without due delay and attending any hearings scheduled for the petition. Practice Direction 3.1 also states that the failure to obtain a registrar certificate within three months from the date of petition, in the absence of good reasons, may result in the dismissal of the petition.
Chan J also stated that a petitioner’s failure to take steps to comply with procedural requirements and answer the court’s requisitions after presenting a winding-up petition would constitute “irresponsible” and “abusive” behaviour, as once a petition is presented, the company cannot dispose of assets or move funds without a validation order.
As noted by the court, if a petitioner no longer wishes to pursue a petition, the proper course is to (a) apply for leave to withdraw the petition if it has not yet been advertised; or (b) have the petition struck out or dismissed as soon as practicable if it has been advertised.
Notably, Chan J warned that, in the future, if a petitioner fails to answer the requisitions raised by the court or to obtain a registrar certificate within three months from the date of the petition, or attend any hearing of the petition, in the absence of any good reasons, the master may refer the petition to a Companies Judge for dismissal for want of prosecution without issuing any warning letter to the petitioner’s solicitors. The court may also order costs against the petitioner on a higher scale.
Conclusion
This case serves as a strong reminder to petitioners and their solicitors of the serious consequences of failing to prosecute a winding-up petition with due dispatch. The court has made it clear that it will not tolerate any delay or abuse of the winding-up process, which will adversely affect a company’s operations. Petitioners should be prepared to answer the court requisitions, comply with procedural requirements under the CWUR and obtain a registrar certificate within three months from the date of the petition, and attend all hearings of the petition, or risk having their petition dismissed for want of prosecution without warning and with adverse cost implications.
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