Creditor seeks bankruptcy of ex-Leung aide citing HK$40m debt

Latest in a string of civil claims facing the man behind failed Hong Kong Mercantile Exchange

PUBLISHED : Friday, 21 February, 2014, 3:37am
UPDATED : Friday, 21 February, 2014, 2:56pm

A creditor of former executive councillor Barry Cheung Chun-yuen is now seeking his bankruptcy over a debt claim of HK$40 million, sinking the former key supporter of Chief Executive Leung Chun-ying further into a financial mire.

Leung Chee-hon, director and shareholder of Hong Kong-listed Sunley Holdings, has filed a bankruptcy petition at the High Court. A hearing is set for April 16.

Cheung and his companies have faced numerous civil claims since June over loans, bills and rent totalling over HK$89 million.

These started emerging after Cheung quit his public posts in May amid police investigations of allegedly bogus documents linked to his failed Hong Kong Mercantile Exchange, which traded gold and silver contracts.

Leung Chee-hon's latest legal bid followed the HK$40 million claim he filed with the High Court against Cheung last August.

Leung sued Cheung as the guarantor for New Effort Holdings, a company wholly owned by Cheung and the majority shareholder of HKMEx.

In the writ, Leung said Cheung guaranteed to indemnify him for any loss if New Effort, through which Cheung owns a 56 per cent stake of the exchange, defaulted on its loans and interest under four agreements in January, February and April last year.

In October, HKMEx staved off eviction from its offices in Cyberport by paying outstanding rent of up to HK$6 million.

In November, the Mandatory Provident Fund Schemes Authority filed a claim against HKMEx for allegedly failing to pay the fund HK$102,799.

In December, the High Court ordered Cheung to repay more than HK$33.4 million to Sinomax Finance as a guarantee for a loan New Effort borrowed in April.

It was the first court judgment made against him over debts since HKMEx collapsed in May.

In its November writ, Sinomax had said Cheung acted as guarantor for the loan, which was to be repaid a month after it was taken out at an annual interest rate of 30 per cent.

Sinomax claimed the deadline was later extended to the end of June. It said Cheung paid interest of HK$750,000 in May and again in August.

Since the filing of the writ, neither Cheung nor New Effort had made further payments, the court heard at the time. Sinomax said New Effort had indicated it would contest the claim.

Up to November 5, the debt and interest accrued amounted to more than HK$33.4 million. High Court Master Katherine Lo Kit-yee also ordered Cheung to pay HK$25,000 in legal costs.

Last month, former HKMEx technology director Andrew Carter applied to wind up the exchange. Carter reportedly won a HK$1.4 million claim in October against HKMEx at the Labour Tribunal for unpaid wages.

Also last month, Intuition Publishing filed a claim against HKMEx with the District Court for an outstanding sum over a contract dated May 21, 2011.

An earlier version of this article incorrectly referred to Leung Chee-hon as a debtor. We apologise for the error.