Former Executive Council member Barry Cheung Chun-yuen was on Monday ordered by the High Court to repay more than HK$33.4 million as a guarantee for a loan borrowed by his company.
This is the first court judgment made against the key supporter of Chief Executive Leung Chun-ying in relation to debts since his Hong Kong Mercantile Exchange surrendered its trading licence in May.
In November, Sinomax Finance filed a writ claiming that Cheung’s New Effort Holdings, the majority shareholder in HKMEx, failed to repay HK$30 million borrowed from Sinomax Finance in April.
The company said Cheung acted as guarantor for the loan, which was due to be repaid a month after it was taken out. The annual interest rate was 30 per cent and the company claimed the repayment deadline was later extended to the end of June.
Cheung was said to have made two interest payments of HK$750,000 each in May and August. The court heard on Monday that neither Cheung nor New Effort had made any repayment since the filing of the writ.
Lawyers for Sinomax told the court that Cheung had not responded since he was served the writ.
The court heard that New Effort would contest the claim.
High Court Master Kathrine Lo Kit-yee also ordered Cheung to pay HK$25,000 in legal costs.
The court heard that up to November 5, the debt and interest accrued amounted to more than HK$33.4 million.
The judge ordered that interest accumulated between November 6 and Monday would be calculated at 30 per cent per annum, the contractual rate. From then on the interest would be calculated at eight per cent.
Cheung had faced claims of about HK$90 million.
In late October, HKMEx staved off eviction by paying HK$6 million in back rent on its offices in Cyberport, Pok Fu Lam, to landlord Cyberport Management Company.
In May, Cheung told the media that HKMEx was surrendering its licence, as it did not meet the regulatory requirement that an exchange have sufficient cash on hand to cover nine months of operations.
Cheung quit Exco and all of his other public posts after being invited to assist a police investigation into false documents linked to HKMEx.