1.What kind of companies can be wound-up?
Only a limited company can be wound-up. The term “winding-up” (or “wound-up”) bears a similar meaning of “liquidation”. It generally means that all the assets of the company would be realized (sold off and converted to cash) through a legal process in order to repay its debts. Winding-up would bring a company to an end.
A limited company is a company that is registered under the Companies Ordinance (Cap. 32 of the Laws of Hong Kong). It is a separate legal entity (i.e. it can sue or be sued in legal proceedings). The liabilities of shareholders are limited to the value of the company’s shares held by them (limited by shares). Another situation, which is not common in commercial organizations, is that the liabilities of shareholders are limited to the amount in which the shareholders have agreed to contribute to the company's assets if the company is being wound-up (limited by guarantee).
An “unlimited company” or a sole trader is not a “company” in a strict sense. It is a business operated in the form of a sole proprietorship. In other words, the business is owned by an individual. A sole proprietor is solely and personally responsible for the liability of the business.
A partnership is a form of business owned by two or more persons (partners). The partners are personally jointly and severally liable (i.e. every partner should be liable) for the liability of the business.
2.What should the petition contain?
Generally, the full name, title (if any) and address of the petitioner; the name and the full address of the registered office of the company; the information concerning the capital of the company; and the objects of the company (i.e. the main aims or the functions of the company which are stated on the company’s memorandum of association) are required. The grounds and the facts to be relied on in support of the petition are also required.
3.I have already obtained a court judgment against a limited company, but the company still refuses to pay. Should I present a winding-up petition?
If a court judgment has been obtained and there is no appeal against the judgment or no attempt by the company to set aside the judgment (to make it invalid), there is generally no dispute over the debt. A winding-up petition may be presented. However, a number of matters should be considered beforehand:
Is it anticipated that the company is solvent (i.e. it has financial ability to pay the debt or part of it)? If "yes", will it be commercially wiser to seek an order from the Court to execute a judgement by some other enforcement mechanism? For example, to seize and sell the company's property forthwith through a court order.
If it is anticipated that the company is insolvent, and therefore it is unlikely that much of the debt can be repaid upon winding-up, will it be commercially wiser to negotiate with the company, or even with other creditors, in order to explore the possibility of reaching a compromise or an arrangement which may maximize the recovery?
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