BUSINESS LAW

BUSINESS 
LAW
Dai Sang Yee Limited (“DSY”) is a Hong Kong incorporated company limited by shares, which imports wine from Spain to Hong Kong.
Angus is the managing director and majority shareholder (he holds 60% shares). There are two other directors Angie and Alan who are also shareholders (holding 10% each) and two further shareholders (holding 10% each).
In June 2009, the board of DSY decided to set up a retail business and created another company limited by shares, Tsiu Business Limited (“TB”), for the purpose of selling the wine. The registered office of TB is the same as that of DSY and Angus is the sole director of TB. DSY owns 60% of the shares in TB and the remaining shares are owned by Angus, who is the sole director.
The retail business was very successful until February 2010 when the demand for Spanish wine seemed to decline in Hong Kong. Other suppliers continued to supply the company only on Angus’ assurance that DSY would give TB financial support. By October 2010, TB could not pay its debts as and when they fell due. It continued trading until December 2011 when it was forced into insolvent liquidation.
The liquidator of TB thinks that TB is a sham company and only exists so that DSY can escape from its legal obligations. He has approached you asking for legal advice as to whether he can pursue a claim against Andy or DSY for personal liability.
Advise the liquidator of TB of any potential claims that may arise.
You must state the legal basis upon which the liquidator could file each claim and any remedies that the court may award. Discuss any case law which may support the liquidator- case. Finally, you should advise the liquidator of his chance of succeeding should he decide to pursue litigation.