HKMEx handed wind-up order as lawsuits mount against founder

Exchange's request involving a debt payment offer is dismissed, with attention turning to hearings concerning founder Barry Cheung

PUBLISHED : Tuesday, 29 April, 2014, 1:15am
UPDATED : Tuesday, 29 April, 2014, 7:31am

Hong Kong Mercantile Exchange was ordered yesterday by a court to be wound up while more details on its embarrassing collapse last year may come out in a hearing on May 27 when its founding chairman and former executive councillor Barry Cheung Chun-yuen would need to show up in court.

Former HKMEx co-president William Barkshire told the South China Morning Post yesterday that he has obtained a District Court order for Cheung to have an oral examination at the court on his finances on May 27, which means Cheung would need to appear at the court or be found in contempt of court.

The SFC should have taken a tougher stance [on HKMEx] to ban it from trading earlier

"It is also important that in future any similar exchange and infrastructure initiatives in Hong Kong are required to be properly capitalised at all times and also strike an appropriate balance in terms of their governance and ownership to avoid the undue influence of a single party," said Barkshire, who resigned after HKMEx collapsed and is now managing director of advisory firm Agora Partners.

The May 27 hearing may unveil details on financial and other problems which plagued the ill-fated HKMEx, which was set up in 2011 at a cost of HK$500 million to trade gold and silver. It closed in May last year as turnover was too thin to generate income to pay the exchange's rent or salaries.

The upcoming hearing is in relation to Barkshire seeking payment of an outstanding Labour Tribunal award of HK$3.2 million for unpaid salary and remuneration.

Barkshire is not the only aggrieved former senior figure at the exchange. Andrew Carter, a former director of technology of HKMEx, filed a petition against the company in January for failing to pay him his salary of HK$1.41 million.

Carter and three other creditors, including HKMEx landlord Hong Kong Cyberport Management, its data service provider Equinix Hong Kong, and an individual named Alfred Mak Kai-yin, refused to accept the company's latest repayment plan.

Barrister Martin Wong, for the HKMEx, told the Court of First Instance that Huang Chun-sheng was willing to invest in the HKMEx and agreed to pay a third of the debts within 30 days.

But Judge Jonathan Harris found the HKMEx had failed to show it will be able to make full payments on the debts and gave the wind-up order.

Lawmaker Christopher Cheung Wah-fung said the HKMEx case raised doubts about the Securities and Futures Commission's regulatory role.

"HKMEx could not pay its staff or the rent. It obviously lacks capital or other financial back-up. The SFC should have taken a tougher stance to ban it from trading earlier so as to protect its creditors. Now its collapse has hurt the city's reputation as an international financial centre," he said.

Barry Cheung, an oil executive who was a close supporter of Chief Executive Leung Chun-ying, declined to comment yesterday.

He faces a separate bankruptcy hearing on May 21 from a lawsuit filed by Leung Chee-hon, director and shareholder of Hong Kong-listed Sunley Holdings, who sued him for failing to repay a debt of HK$40 million.

The HKMEx and Cheung also face further civil actions from LCH Clearnet, a British clearing house, for financial transaction settlements worth about HK$14.6 million.