Winding Up Petitions by Secured Creditors?
The recent decision of the Court of First Instance in Seatown Private Credit Master Fund v Trillion Glory Limited and R&F Properties (HK) Company Limited [2025] HKCFI 1456 brings the position on the viability of winding up petitions brought by secured creditors into sharp relief.
The Court was dealing with two winding-up petitions presented by the Petitioner, a secured creditor, against two Hong Kong-incorporated companies: Trillion Glory Limited (“Trillion Glory”) and R&F Properties (HK) Company Limited (“R&F”) (together the “Companies”).
The Petitioner was among the secured creditors under a US$540 million loan facility with Trillion Glory as the borrower and R&F as the guarantor. The loan was secured by a comprehensive array of securities, with the secured creditors entitled to appoint receivers over the secured assets, and the right having been exercised in relation to two share charges, including over all the shares in Trillion Glory.
The Petitioner sought to wind-up the Companies, alleging insolvency, inadequate value of security and the need to investigate alleged wrongdoing.
In dismissing the petitions, Linda Chan J held that:
- Secured creditors stand apart from the collective process of liquidation and do not have any real interest in a company’s assets beyond their security. This is because a security creditor has the right to realise the security provided by the company for the purpose of repaying the debt owed to it. It is only the unsecured creditors who have any real interest in the company.
- The Court has the discretion, as a matter of well-established practice, to dismiss a winding-up petition for the absence of free assets (as the company’s assets are charged), and thus the failure to demonstrate any other interest in having the company wound up.
The Court also emphasised that allegations of wrongdoing (including the causes of action against alleged wrongdoers) and the ensuing need for investigations should be pleaded in the winding up petition. It is not open to the petitioner to rely on unpleaded matters in seeking a winding-up order, and in any case, such allegations are of limited utility to the petitioner when such causes of action are assets of the company (in this case, Trillion Glory) that are caught by a floating charge given over all of the company’s assets, present and future, in favour of the secured creditors including the petitioner.
The full judgment is available here.
