A Hong Kong court has issued a landmark ruling, ordering a former director of the now-defunct Kiwi Chow restaurant chain to pay a substantial sum for failing to comply with a court order to wind up the company.
The Court's Ruling and Financial Penalty
The High Court of Hong Kong has mandated that former director Chan Wai-man must pay HK$14.2 million (approximately £1.4 million) into the company's coffers. This ruling, delivered by Justice Linda Chan, stems from Chan's failure to adhere to a previous court order issued in July 2024, which required him to assist in the winding-up process of Kiwi Chow Limited.
The judge found that Chan, who had expressed dissent from the board's decision to place the company into voluntary liquidation, did not surrender the company's accounting records and other essential documents to the court-appointed liquidators. This non-compliance was deemed a "wilful and deliberate" contempt of court.
Background of the Kiwi Chow Collapse
Kiwi Chow, a once-popular chain specialising in egg waffles and other Hong Kong-style street food, faced financial turmoil leading to its collapse. The company was initially placed into voluntary liquidation by its shareholders in early 2024. However, the process was complicated by Chan Wai-man's opposition.
Subsequently, in July 2024, the High Court issued a compulsory winding-up order. The court-appointed liquidators, from the firm Kroll, were tasked with untangling the company's affairs but were obstructed by the lack of necessary financial documents. The missing records are considered crucial for investigating the company's affairs and potential claims against former directors.
Legal Consequences and Broader Implications
Justice Linda Chan set a strict deadline of 4:30 pm on 30 December 2025 for the HK$14.2 million payment to be made. The judge warned that failure to meet this deadline would result in Chan Wai-man being committed to prison for his contempt. The sum is intended to cover the estimated value of the missing records and the losses incurred by the company due to their absence.
This case highlights the severe personal consequences for company directors in Hong Kong who fail to fulfil their statutory duties during insolvency proceedings. It underscores the court's authority in enforcing compliance and protecting the interests of creditors during a winding-up. The ruling sends a clear message on the importance of corporate governance and director accountability, even in cases of dissent.
The liquidators continue their work to resolve Kiwi Chow's outstanding matters, but the case remains a stark example of the legal risks facing directors in contested insolvencies.
