Liquidator of yoga firm accused of conflict of interest

PUBLISHED : Saturday, 19 June, 2010, 12:00am
UPDATED : Saturday, 19 June, 2010, 12:00am

Two Democratic Party lawmakers have filed a complaint with an accountants' accreditation body, accusing an accountant of concealing his links to Planet Yoga while serving as one of the chain's provisional liquidators.

The move came as four Planet Yoga members and Democrats Lee Wing-tat and Kam Nai-wai demanded that the Official Receiver's Office intervene in the liquidation proceedings to help the chain's members recover their losses. Under the law, a notice must be issued to the creditors within 28 days after a company applies for voluntary liquidation.

Planet Yoga made the application on May 14 and a meeting between creditors and provisional liquidators to discuss repayment arrangements was scheduled for May 31. But the meeting ended in chaos when about 2,000 people tried to cram into the auditorium - which holds only 350 people - at the Duke of Windsor Social Service Building in Wan Chai.

Certified accountants Danvil Chan Kin-hang and Tso Yin-yee are serving as Planet Yoga's provisional liquidators and both have applied to become official liquidators.

Lee said yesterday that Chan was director of Honest Joy Enterprise Consultants, a subsidiary of Honest Joy Group. Planet Yoga's holding company, Team Bright Corporation, is also part of Honest Joy Group.

Lee said Chan deliberately concealed his role as director of Honest Joy Enterprise while serving as the yoga chain's provisional liquidator.

'It's an outright case of conflict of interest,' he said.

Lee lodged a formal complaint with the Hong Kong Institute of Certified Public Accountants yesterday, accusing Chan of professional misconduct.

A spokeswoman for the institute said complaints were thoroughly assessed and could result in a formal investigation and disciplinary action.

Lee said that members of the yoga chain could not hold any meetings with the liquidators as the latter could not be impartial because of their links to the company.

'Law enforcers are not required by the law to get involved in cases involving voluntary liquidation in the initial stage. But if meetings are being adjourned again and again, or even no meetings can be held between the creditors and liquidators, victims can file a case with the High Court to require the replacement of liquidators. If the stalemate drags on, victims can never get their money back,' Lee said.

Kam said around 600 staff were affected by the closure. 'Some staff, who have a better chance of getting legal aid, will soon file a case in the High Court,' he said.

A spokesman for the Official Receiver's Office said its role was minimal as voluntary winding-up, unlike compulsory liquidation, does not involve the courts.

The yoga chain, with three outlets and 13,000 members closed suddenly on May 14. Over 20 members filed reports to the police after reading the company's balance sheet prepared for the May 31 meeting. The sheet showed the firm had received about HK$80 million in membership fees, and had a net deficit of more than HK$100 million.

In the red

When Planet Yoga folded last month it had 13,000 members

The company had a net deficit of, in HK dollars: $100m