HCCW658/2025 RE NORTH STAR ELECTRONIC (HONGKONG) LTD - LawHero
HCCW658/2025
高等法院（公司清盤）Linda Chan J15/2/2026[2026] HKCFI 1332
HCCW658/2025
HCCW658/2025 RE NORTH STAR ELECTRONIC (HONGKONG) LTD
HCCW 658/2025
[2026] HKCFI 1332
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
COMPANIES (WINDING-UP) PROCEEDINGS NO 658 OF 2025
________________________
IN THE MATTER OF the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap. 32 of the Laws of Hong Kong
and
IN THE MATTER OF NORTH STAR ELECTRONIC (HONGKONG) LIMITED (星輝香港股份有限公司) (Company Number 2821408)
________________________
Before:
Hon Linda Chan J in Court
Date of Hearing:
16 February 2026
Date of Judgment:
16 February 2026
Date of Reasons for Judgment:
4 March 2026
________________________
REASONS FOR JUDGMENT
________________________
1. At the second callover hearing of the Petition presented on 22 October 2025 by the petitioner, TMX Logistics, Inc (“Petitioner”), against North Star Electronic (Hongkong) Limited (星輝香港股份有限公司) (“Company”), I dismissed the Petition and ordered the Petitioner to pay the costs to the Company on an indemnity basis with certificate for 2 counsel. These are the reasons for my judgment.
Background
2. The Company is a Hong Kong company incorporated on 29 April 2019. Its share capital is HK$10,000.
3. Mr Xu Chenghui (徐成輝) (“Xu”) is the sole director of the Company.
4. The Company was incorporated by Xu for the purpose of acquiring Tatung Mexico S.A. de C.V. (“Tatung Mexico”) and its 2 subsidiaries namely, the Petitioner and TMX Technologies Inc (“TTI”), a company incorporated in California (together “Group”) from a Taiwan company[1].
5. The acquisition was introduced to Xu by Mr Diau Chan-Hsing (“Diau”), who was the manager of the Group at the time.[2] The Company’s primary asset was a plot of land in Mexico with factory premises (“Mexico Land”) and an adjacent lot (“Adjacent Land”) both held by Tatung Mexico. By an agreement dated 1 March 2021 (“Lease”), Tatung Mexico leased the factory to TTE Technology, Inc. (“TTE”).[3]
6. The Petitioner was incorporated in Texas and has since 6 March 2023 been a subsidiary of the Company, having been acquired by the Company pursuant to the acquisition described in §§4-5 above.
Petitioner’s case
7. The Petitioner’s case, as pleaded in §§5-8 of the Petition, is very simple:
(1) The Company is indebted to the Petitioner in the sum of US$2,648,953 (“Debt”) which comprises (a) a loan in the principal amount of US$2,500,000 advanced by the Petitioner to the Company (“Loan”) pursuant to a Promissory note dated 1 September 2021 (“Promissory Note”) together with (b) interest from 20 November 2021 to 1 September 2025 in the amount of US$148,998.
(2) On 29 September 2025, the Petitioner through its solicitors, Messrs. Fung, Wong, Ng & Lam LLP (“FWNL”), served a statutory demand on the Company requiring it to pay the Debt (“SD”).
(3) The Company failed to comply with the SD. By virtue of s.178(1)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (“CWUMPO”), the Company is deemed unable to pay its debts.
Company’s case
8. The Company filed an affirmation of Xu dated 30 December 2025 (“Xu 1st”) raising 4 grounds in opposition to the Petition:
(1) Ground 1: The Promissory Note contains an exclusive jurisdiction clause (“EJC”) in favour of the court of El Paso County, Texas.
(2) Ground 2: There are bona fide disputes. The Promissory Note was signed pursuant to a fraudulent scheme against the Company whereby it was deceived by Diau into believing that fines would be levied by Mexican authorities on its subsidiary (Tatung Mexico) unless the Company established a new entity to acquire the assets of Tatung Mexico using funds which Diau would cause to be remitted to it (“Remittance”). The Promissory Note was a sham to conceal the purpose of the Remittance to avoid tax fines and was never intended to be enforced. It is in any event voidable for fraudulent misrepresentation as the tax fines were a fiction.
(3) Ground 3: The Petition is an abuse of process as it was presented with ulterior motives by Mr Zeng Bingsen (“Zeng”) to defeat the Texas proceedings commenced by the Company (and Xu) against him.
(4) Ground 4: The Petitioner’s current board lacks standing and authority to present the Petition, and in turn the Petitioner’s solicitors have no authority to sue.
9. It is the Company’s case that the Promissory Note and the Loan formed part of a fraudulent scheme by Diau and Zeng to usurp control of the Company and its subsidiaries from Xu, who is the sole beneficial shareholder of the Company. The alleged fraud arose in this way:
(1) On 26 August 2021, Diau informed Xu that the Petitioner would remit US$2.8 million to the Company, viz the Remittance. On around 2-3 September 2021, Diau coaxed Xu into setting up a new holding company in Mexico to avoid tax fines on Tatung Mexico that would be charged if it owned real estate (“Alleged Tax Fine”) (“1st Misrepresentation”).[4]
(2) Diau caused the Remittance to be made to the Company in 4 tranches on 6 September 2021, 15 September 2021, 9 November 2021 and 2 December 2021. It was only after 2 remittances that on 10 October 2021, Diau raised the need to prepare the Promissory Note as a formality.[5]
(3) On 11 November 2021, Diau sent Xu the draft Promissory Note, claiming that it had to be signed and backdated to a date prior to the first 2 remittances because the tax bureau would check for compliance.[6] Relying on the 1st Misrepresentation, Xu signed it, believing that it was necessary to obscure the purpose of the Remittance to avoid the Alleged Tax Fine.[7]
(4) On 19 April 2022, Diau revived the issue of the Alleged Tax Fine and represented to Xu that he had to exit the Group; otherwise the Alleged Tax Fine could become US$6 million in tax plus a US$4 million in fine.[8] On 20 April 2022, Diau further claimed that due to the Group’s import-export disparity, there could be a potential fine of US$37.5 million[9] (“2nd and 3rd Misrepresentations”).
(5) Relying on the 2nd and 3rd Misrepresentations, in May 2022, Xu temporarily relinquished his shareholding and directorship in the Group by (a) transferring 50% of shares in the Company to each of Zeng and Mr Wu[10] for nominal consideration of HK$5,000 (which was never paid) to be held on trust; (b) appointing Zeng in his place as director of Tatung Mexico and transferred his shares in Tatung Mexico to Mr Wu, to be held on trust; and (c) resigning as director of the Petitioner with Mr Salvador Enrique (Diau’s nominee) appointed in his stead.[11] These steps later enabled Diau and Zeng to misappropriate the Group’s assets.
(6) It transpired that the 1st, 2nd and 3rd Misrepresentations were all false. On 26 July 2024, Xu discovered from a telephone call with the General Manager of TTE that the authorities never raised any issue of tax fines[12]. Further, Xu discovered that the Lease[13] provided that any fines imposed by authorities shall be borne by TTE, such that even if the risks of tax fines were credible, the Group would not be liable.[14]
Legal proceedings between Xu, Zeng, Diau, Petitioner & Company
10. It is not in dispute that even before the presentation of the Petition, the parties had already been embroiled in legal proceedings commenced in Texas and one of the issues raised is the validity of the Promissory Note.
11. It is the Company’s case that in or around 2025, Xu discovered that Zeng and Diau had sold the Mexico Land and the Adjacent Land at an undervalue to their affiliates.[15] Accordingly, on 12 May 2025, the Company and Xu claimed against inter alios Zeng and Diau in Texas for their fraud.[16] By an ex parte Temporary Restraining Order (“TRO”) dated 16 May 2025, the Texas Court restrained Zeng and Diau from transacting on behalf of Tatung Mexico, the Petitioner, and TTI.[17] In breach of the TRO, Zeng and Diau transferred Tatung Mexico’s shares in the Petitioner to an unknown third party on 28 May 2025 (“Share Transfer”).[18]
12. On 18 June 2025, the Petitioner counterclaimed against the Company for the sum under the Promissory Note.[19] This was despite the fact that the maturity date (31 December 2022) had long expired and the Petitioner never before demanded repayment.
13. After the Petition had been presented on 22 October 2025, in November 2025, the Petitioner withdrew its counterclaim in Texas.
14. Despite the Texas Court dismissing the Company’s claims on 9 November 2025 (without hearing oral submissions and oral evidence and with reason set out in one paragraph),[20] the Company filed (1) on 8 December 2025 a Motion for Retrial (effectively an appeal), and (2) on 22 December 2025 a new claim seeking declarations that the Promissory Note is null and void.[21]
15. While the Texas proceedings are ongoing, on 25 July 2025, Zeng (qua 50% shareholder[22]) sought leave to commence a statutory derivative action on behalf of the Company against Xu for his alleged failure to cause the Company to repay the Promissory Note (“SDA Application”).[23]
1st callover hearing
16. The Petition first came to be heard on 5 January 2026. At the hearing:
(1) Counsel for the Petitioner[24] sought an immediate winding up order against the Company on the ground that Xu 1st was filed out of time and in any event, the Debt was indisputable.
(2) Unconditional leave was granted to the Company to file Xu 1st having regard to (a) the complex factual background set out therein including the various legal proceedings commenced by the parties against each other, (b) the time spent by Xu in dealing with the ongoing legal proceedings and obtaining legal opinion on Texas law, and (c) the grounds raised by the Company appears to be substantial.
(3) Mr Danny Tang (appearing with Mr William Wong), counsel for the Company, submitted that the Petition was an abuse of process on the grounds that (a) the Promissory Note contained a EJC in favour of the Texas Court; (b) there was a bona fide dispute on substantial grounds in respect of the Debt; and (c) there were ongoing proceedings in Texas between the Petitioner and the Company which concerned, inter alia, the validity of the Promissory Note.
(4) This Court observed that on the basis of the grounds raised by the Company, the Petitioner should re-consider whether it still wishes to pursue the Petition. The Petition was adjourned to a second callover hearing.
17. Notwithstanding the court’s observation, the Petitioner filed the 2nd affirmation of Zeng dated 26 January 2026 (“Zeng 2nd”) in reply and exhibited an expert report of Rodolfo Mata on Texas law (“P’s Report”) in reply to the expert report of Stephen H. Nickey dated 29 December 2025 exhibited to Xu 1st (“Co’s Report”).
18. For the reasons explained below, each of the grounds raised by the Company is sufficient for the court to dismiss the Petition.
Ground 1: EJC in favour of Texas Court
19. The Promissory Note provides:
“This note is governed by Texas law and the Maker [the Company] consents to the jurisdiction of the courts located in El Paso County, Texas” (“Subject Clause”).
20. Mr Joseph Wong (appearing with Mr Jonathan Kwok), counsel for the Petitioner, submits that there is no issue of EJC on the facts given that:
(1) The Subject Clause is non-exhaustive and/or not binding on the Petitioner as lender.
(2) Only Xu signed on behalf of the Company as “the Maker” of the Promissory Note. Therefore, it is not immediately apparent that the Petitioner as lender consented to the jurisdiction of the Texas Court, or that the Petitioner agreed to resolve all disputes arising from the Promissory Note and/or the Debt in that Court.
(3) By its very nature, a promissory note “is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money, to, or to the order of, a specified person or to bearer” (Chitty on Contracts, 36th ed, §37-189). The Petitioner’s intent to resolve all disputes arising from the Promissory Note is thus far from clear.
(4) The view stated in Co’s Report[25] is “highly questionable”, as the expert could do no better than refer to a single authority which is (a) in the employment context and (b) concerns “conflict of domestic jurisdiction” to suggest that the Promissory Note is a binding EJC.
(5) As stated in P’s Report, for a forum selection clause to be regarded as mandatory or exclusive, “the clause must go beyond establishing that a particular forum will have jurisdiction and must clearly demonstrate the parties’ intent to make that jurisdiction exclusive”[26].
(6) To this end, the use of explicit or mandatory language in the Subject Clause is necessary. It is the opinion of the Petitioner’s expert, the language in the Promissory Note is likely to be held as permissive rather than mandatory. Thus, it “does not preclude the possibility of suit in Hong Kong”[27].
21. On the other hand, Mr Tang submits that under Texas law, the Subject Clause is a valid forum-selection clause requiring both parties’ submission to the Texas Court for the following reasons:
(1) That the Subject Clause expressly identifies the Company but not the Petitioner does not affect the Company’s ability to enforce it.[28] This is supported by In re Brown 441 S.W.3d 405, where a jurisdiction clause which only stated that the employee agreed to submit to the jurisdiction of Virginia was enforced against the employer, such that the employer’s claim lodged in Texas was dismissed.[29]
(2) P’s Report failed to address this. The Petitioner’s contention (§20(4) above) drew 2 distinctions without difference. It is unclear what is meant by “conflict of domestic jurisdiction”. It is well-known that US states are separate law districts for conflict of laws purposes.
(3) The Petitioner’s case boils down to the point that the Subject Clause does not contain mandatory language such as “exclusive” or “shall be brought only”.[30] However, the Subject Clause is not even a conventional “non-exclusive jurisdiction clause” (“NEJC”). Texas Court is the only forum identified, and is not described as “non-exclusive”. Read together with the Texas law clause which immediately precedes, the parties clearly intended their disputes be resolved in Texas. Indeed, the court has construed jurisdiction clauses which contain apparently permissive language (e.g. “may”) as imperative when read in context. Ultimately, it is a question of the parties’ intention.[31]
(4) The Petitioner’s construction is more consistent with how the Promissory Note was drafted in unilateral terms (i.e. from the Company’s perspective as “Maker”) and was executed only by the Company. After all, a jurisdiction clause may in substance and effect confer exclusive jurisdiction on the court nominated, irrespective of whether “exclusive” (or like words) is used.[32]
(5) The Petitioner’s reliance on Chitty§37-189 is a bad point. The Promissory Note represents the Company’s promise to the Petitioner to submit to Texas jurisdiction, which was in turn accepted by the Petitioner. The forum non convenience analysis in P’s Report §§20-32 thus also misses the point.
(6) The Petitioner’s own conduct is consistent with the Company’s construction. The Petitioner invoked the Texas Court’s jurisdiction and filed a counterclaim based on the Promissory Note. Although the Company’s main claim was dismissed (now being appealed), given that the Company filed a new suit in Texas, as a matter of Texas law, the Petitioner must now assert its claim based on the Promissory Note there or risk being barred from pursuing it forever.[33]
(7) That the Petitioner has withdrawn its counterclaim[34] does not change the fact that (a) it had submitted to Texas jurisdiction and that (b) there are ongoing Texas proceedings on the Promissory Note. It only demonstrates the Petitioner’s opportunistic approach to litigation.
(8) A winding-up petition would generally be dismissed where the claim is subject to an EJC, absent countervailing factors such as a dispute that borders on the frivolous or abuse of process (Re Lam Kwok Hung Guy (2023) 26 HKCFAR 119, §105).
(9) Even if the Subject Clause is characterised as a NEJC (which is denied), the parties have consented to submit to a named jurisdiction (Texas). Where proceedings have been instituted in the named forum, the party who seeks to contest the appropriateness of that forum has a very heavy burden as the effect of an NEJC is in practice the same as an EJC.[35] The Petitioner first counterclaimed on the Promissory Note in Texas, and only later presented the Petition. The Petitioner is impermissibly challenging the propriety of Texas’ jurisdiction over the Promissory Note through the backdoor.
(10) The Company’s defences (Ground 2) are clearly not frivolous. Consistent with the parties’ bargain, they should be resolved in Texas.
22. In my view, the arguments advanced by Mr Tang are well-founded.
(1) There is no requirement that the Subject Clause must be couched in mandatory or exclusive term as contended by Mr Wong. The real issue is whether the parties have agreed to submit their dispute on the Promissory Note to the named forum. The evidence before the court shows that the parties clearly intended to submit any dispute arising out of the Promissory Note to the Texas Court, being the only jurisdiction identified in the Promissory Note. This is reinforced by the Petitioner’s only conduct in making a counterclaim against the Company for the sum under the Promissory Note.
(2) Although the Promissory Note was only signed by Xu on behalf of the Company (as maker of the Promissory Note), it was accepted by the Petitioner. The act of accepting (and relying on) the Promissory Note is sufficient to make the Petitioner a party to the Promissory Note and be bound by its terms including the Subject Clause. The position is analogous to In re Brown, where the Texas Court held that the forum- selection clause contained in the employment agreement was binding upon the employer even though it was only signed by the employee.
23. The Petitioner is bound by the Subject Clause and should bring its claim under the Promissory Note in the Texas Court.
24. The Petitioner has not identified any countervailing factors, let alone exceptional circumstances, which would justify the court exercising its discretion to allow the Petitioner to act inconsistently with the Subject Clause. The belated argument raised by Mr Wong that the factual matters raised by the Company is “a dispute that borders on the frivolous” is untenable. The Petitioner has not in Zeng 2nd identified any factual matters or documents which go anywhere near to showing that the facts and matters set out in Xu 1st (some of which are supported by contemporaneous documents including communications with Diau and Zeng) can be characterised as “borders on the frivolous”.
Ground 2: Bona fide dispute on substantial grounds
25. The principles are well established and have been summarised in Re Elion International Investment Ltd [2026] HKCFI 465, §29. In short, a company which disputes a petitioning debt bears the burden to show a bona fide dispute on substantial grounds and for this purpose, must adduce sufficiently precise evidence which are believable against indisputable background. Where oral evidence is required to decide a substantial dispute of fact, the petition will be dismissed. Where a debt has been acknowledged, the evidence and argument relied on to establish a substantial ground in opposition will have to be compelling.
26. Mr Wong contends that the Company fails to discharge the burden of showing that it has a bona fide dispute on substantial grounds on the Debt for the following reasons:
(1) There is no dispute that the Promissory Note is evidence of the Company’s indebtedness to the Petitioner.
(2) Despite Xu’s assertion that the Promissory Note is liable to be set aside on the ground of misrepresentation and/or fraud, no steps have been taken to do so since the maturity date (31 December 2022). Taking the Company’s case at its highest, Xu discovered the misrepresentations in July 2024[36]. Yet, even after the SD had been served, the Company did not take any proceedings to contest the validity of the Promissory Note.
(3) There is no sufficiently precise evidence of the alleged misrepresentations and/or fraud perpetrated on the Company. The Petitioner, the Company, Xu, Diau and Zeng are separate legal entities. Insofar as Xu alleges there are disputes between him and Diau/Zeng, it is unclear how that would affect the Petitioner’s right to petition for the winding up of the Company.
27. I am unable to accept Mr Wong’s arguments. Far from no sufficiently precise factual evidence, the Company has adduced contemporaneous documents in support of the alleged misrepresentations and fraud. The allegations, which the Petitioner does not admit, are not ones which can or should be determined summarily or without hearing oral evidence from the relevant parties.
28. Mr Tang submits that the Company has raised bona fide defences based on sham and misrepresentation in that:
(1) The Petitioner has no response to the Company’s case on misrepresentations and fraud other than a general “non admission”.[37] The Petitioner’s failure to deny the Company’s case should be taken against it as it must know that lying on oath will give rise to penal consequences.[38]
(2) A sham exists where parties intended that the documents or acts (a) would not create the legal rights or obligations they appear to create and (b) would mislead a third party into believing those rights and obligations were created. The parties need not share the same motivation.[39]
(3) Xu executed the Promissory Note under the belief – induced by Diau – that it was necessary to conceal the true purposes of the Remittance (i.e. to fund the acquisition of the Mexico Land) to avoid the Alleged Tax Fine. Meanwhile, Diau procured the Petitioner to issue the Promissory Note, knowing that no such fine would ever exist. Hence, neither party intended the Promissory Note to be enforced according to its terms. Diau’s representations were documented by WeChat records.[40] Xu had no reason to doubt Diau’s intentions, as Diau dealt with the authorities and the operations on the ground.[41] The Promissory Note is also independently voidable for the 1st Misrepresentation as such fines never existed.[42]
(4) The Petitioner’s arguments (set out in §26 above) is the sum total of the Petitioner’s response. None withstands scrutiny in that:
(a) §26(1) is immaterial as the Company does dispute the alleged liability to the Petitioner.
(b) §26(2) is a forensic point which supports the Company’s case: the Promissory Note was never intended to be enforced, and the Petitioner never sought to recover the alleged Debt since 31 December 2022 until these proceedings. It is senseless to criticise the Company for not commencing proceedings to “contest the validity of the Promissory Note” prior to being served with the SD. In any event, the Company filed a new claim in Texas in December 2025 contesting the Promissory Note.[43]
(c) §26(3) ignores the particulars of misrepresentations and sham detailed in §9 above.
29. I agree that for the reasons advanced by Mr Tang, there is a bona fide dispute on substantial grounds that the Promissory Note is not binding or enforceable against the Company.
Ground 3: Abuse of process
30. Mr Tang submits that it is an abuse of process if the petitioner does not really want to obtain liquidation, but simply to put pressure on the target; or the petitioner does want the relief sought, but he is not acting in the interests of the general body of creditors.[44] The Petition is presented for a collateral purpose given that:
(1) Zeng is both the nominal plaintiff in the SDA Application and the Petitioner’s director. He is simultaneously seeking to sue Xu on behalf of the Company, whilst also seeking (via the Petitioner) to wind up the Company. This is diametrically inconsistent and abusive because: (a) in the SDA Application, Zeng affirmed that the Company is financially sound and is able to indemnify the cost of the intended action;[45] yet, as director of the Petitioner, he swore an affidavit verifying the Petition; (b) if the Company is wound up, the liquidators (rather than Zeng) would take carriage of the intended derivative action.[46]
(2) These manoeuvres were brought to frustrate the Texas proceedings and to stretch Xu and the Company thin. With the Company wound up, Xu would lose control and be unable to prosecute the Texas proceedings against Zeng. Whilst the Company has demonstrated every intention to dispute liability under the Promissory Note in Texas, the Petitioner has consistently been forum-shopping.
31. Mr Wong does not dispute that Zeng has made inconsistent assertions concerning the solvency of the Company in his affirmation filed in support of the SDA Application. Nor does Mr Wong advance any arguments to justify or explain why Zeng’s act in causing the Petitioner to present the Petition and pursuing the SDA Application is not abusive.
32. Nonetheless, Mr Wong argues that the threshold for finding abuse of process on the part of the Petitioner on the basis of improper advantage in parallel and/or related proceedings is high. Reliance is placed on Ricco (International) Co Ltd v Uni-Harvest International Ltd [2020] HKCFI 201, where DHCJ Abraham Chan SC said that (1) a party alleging abuse of process must properly substantiate its claim. Repeated assertions that the petition was presented for collateral purpose unsupported by any meaningful particulars will not be entertained by the court; (2) the mere fact that a party presents a petition when related proceedings are still afoot cannot, without more, be regarded as an abuse as a creditor’s right cannot be displaced merely because the company may have a claim against it that is disputed in litigation; and (3) the company has no counterclaim against the creditor in the related proceedings is a factor that the court may take into account.
33. I do not think that Ricco assists the Petitioner. In that case, the petitioning debt arose out of a costs order and the petitioner was a judgment creditor and was entitled ex debito justitiae to a winding up order. The suggestion that the presentation of the petition by the petitioner was an abuse of process only fell to be rejected.
34. Here, the validity of the Promissory Note has been the subject matter of the dispute in the Texas proceedings and is hotly disputed by the Company.
35. Further, in view of the conclusion that there is a bona fide dispute on substantial grounds in respect of the validity of the Promissory Note and hence the liability of the Company to pay the Debt, the Petitioner is not a “creditor” within the meaning of s.179(1) of CWUMPO and, therefore, has no locus to present the Petition (Re Hyundai Engineering & Construction Co. Ltd [2002] 2 HKLRD 71, §7, citing Mann v Goldstein[1968] 1 WLR 1091). As the Petitioner was aware of the dispute raised by the Company regarding the validity of the Promissory Note by 15 October 2025 at the latest (see §40 below), the presentation of the Petition on 22 October 2025 constituted an abuse of process.
Ground 4: Lack of authority
36. Mr Tang submits that the Share Transfer is liable to be set aside, such that the Petitioner’s current board (Diau, Zeng and Enrique) has no proper authority to present and prosecute the Petition. His arguments run like this:
(1) In breach of the TRO, Zeng caused the Share Transfer.[47] This raises a serious issue over Zeng’s authority to procure the Petitioner to present this Petition because the Texas Court may order that the Share Transfer be reversed, as it was null and void and effected without the consent of the Company or Xu.
(2) Given that the Petitioner’s current board was not appointed by the Company but by the transferees, the Petitioner lacks authority to prosecute the Petition.[48]
(3) The Company has passed a resolution for removing the current board.[49] But for the wrongdoers’ control, it would have been given effect.
(4) P’s Report contends that the TRO is void because the Texas Court had allowed its jurisdictional challenge.[50] But that decision is under appeal. The self-serving secretary’s certificate and written board resolution adduced by the Petitioner[51] are beside the point. The Petitioner cannot pull itself up by its own bootstraps when its board lacks authority in the first place.
37. Mr Wong does not accept that the Petitioner lacks proper authority to sue for 2 reasons:
(1) The evidence adduced by Zeng shows that he has been duly authorised by the Petitioner to commence proceedings against the Company[52].
(2) The Company’s challenge to Zeng’s authority to sue on behalf of the Petitioner is answered by P’s Report[53]. Importantly, having reviewed the relevant law and evidence, the Petitioner’s expert concluded that “the present [Petitioner] board and officers and supports the authority to cause [the Petitioner] to pursue [the Promissory Note] enforcement and remedies, including winding up proceedings, in the Hong Kong Proceedings.”
38. The question whether the Petitioner has proper authority to sue is a matter of Texas law, being the law governing the internal affairs of the Petitioner. It is not an issue which can or should be determined by this Court.
Costs
39. As stated above, the Petitioner was well aware of the grounds raised by the Company in opposition to the Petition including the dispute on the validity of the Promissory Note and hence the lack of locus to present the Petition as a creditor. The position is no different from the petitioner in Re Hyundai where Kwan J (as she then was) ordered the costs of the petition to be paid by the petitioner on an indemnity basis.
40. Indeed, the conduct of the Petitioner in presenting the Petition is even more abusive than the petitioner in Re Hyundai as the Company’s solicitors did on 15 October 2025 (i.e. one week before the Petition was presented) wrote to FWNL setting out the 4 grounds (which are materially the same as the 4 grounds raised in Xu 1st) as to why “any winding-up petition based on the [Debt] is wholly misconceived and bound to fail”, and “each of the ground is sufficient to warrant the dismissal of any such winding-up petition”. The Petitioner simply ignored the Company’s letter and presented the Petition on 22 October 2025. Such conduct on the part of the Petitioner is abusive and warrants the court ordering the costs of and occasioned by the Petition to be paid by the Petitioner on an indemnity basis, with certificate for 2 counsel.
(Linda Chan)
Judge of the Court of First Instance
High Court
Mr Joseph Wong and Mr Jonathan Kwok, instructed by Fung Wong Ng & Lam LLP Solicitors, for the Petitioner
Mr Danny Tang and Mr William Wong, instructed by King & Wood Mallesons, for the Company
Ms Teresa Kin, of Official Receiver’s Office, for the Official Receiver
[1] Tatung Co., Ltd
[2] Xu 1st §§7-8
[3] Xu 1st §§12, 20
[4] Xu 1st §§27-28; WeChat messages
[5] Xu 1st §32; WeChat messageon 10 October 2021 at 21:53:06 (上次送汇95万去星辉，我们主计有意见，我这边先把手续补齐（要有董事会议记录）后主计才同意下次汇款，我会在下周补齐).
[6] Xu 1st §§34-35; WeChat messageon 11 November 2021at 22:45:33(会计师甚至税务单位一定会查是否公司的汇款行为有遵守公司法行事。所以我请律师把日期往前挪).
[7] Xu 1st §36
[8] Xu 1st §39; WeChat message on 19 April 2022 at 23:29:48
[9] Xu 1st §40; WeChat message on 20 April 2022 at 8:49:35
[10] Mr Wu Guanghua, brother-in-law of Xu’s wife: Xu 1st §43.3
[11] Xu 1st §§45.1-45.3
[12] Xu 1st §60.2
[13] Clause 3(b)(iii) provides “Parties hereby jointly and severally represents and warrants that: … (iii) During the term of this agreement, any fines imposed by the authorities and other risks due to violation of IMMEX regulation, shall be responsible by [TTE]”
[14] Xu 1st §§60-61
[15] Xu 1st §65
[16] Xu 1st §69; see Second Amended Petition filed in Texas Court (Prayer for Relief)
[17] Xu 1st §§71, 73. An Agreed Limited Temporary Injunction was further issued on 13 June 2025 to enjoin Zeng and Diau from conducting any transactions on behalf of the Group
[18] Xu 1st §94.1
[19] Petitioner’s counterclaim filed in Texas Court §§11-13
[20] Xu 1st §§75, 84
[21] Xu 1st §§86-87
[22] The Company contends that Zeng has been holding the 50% shares in the Company as a result of the fraudulent scheme: Xu 1st §45.1(b)
[23] HCMP 1244/2025; Xu 1st §23. The hearing took place on 12 February 2026.
[24] Mr Kaiser Leung
[25] Co’s Report §12
[26] P’s Report §15
[27] P’s Report §§18-19
[28] Co’s Report §§8-12
[29] That clause provided relevantly that “Employee agrees to submit to the jurisdiction of those courts, waiving the defences of lack of personal jurisdiction or inconvenient forum”: Co’s Report §12
[30] P’s Report §§13-19; Petitioner’s skeleton §§17-18.
[31] Bank of China Ltd v Yang Fan [2016] 3 HKLRD 7 §§31-35 (To J) (applying contractual interpretation principles under Hong Kong law).
[32] The Export-Import Bank of China v Taifeng Textile Group Co Ltd[2018] HKCFI 1840 §59.
[33] Co’s Report §20
[34] Petitioner’s Notice of Nonsuit dated 12 November 2025
[35] Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631 §§27-28, 31, 33(1), 37.
[36] Xu 1st §60
[37] Zeng 2nd §3
[38] Sin Kwok Lam v Chan Ting Lai[2025] HKCFI 1435 §§54-55 (DHCJ Alan Kwong)
[39] 储惠敏v Kwok Ching Ching [2024] HKCFI 1380 §§45, 49
[40] WeChat messageon 10 October 2021 at 21:53:06 (raising the need to prepare documentations after 2 instalments had been remitted); WeChat messageon 11 November 2021at 22:45:33(explaining the need to backdate purportedly because it may be reviewed by the auditors or the tax bureau). On 3 September 2021, Diau asserted that: “要罚多少就多少，税务局说了算…所以要尽快办过户，要不然很被动，辛辛苦苦赚的钱都会被老墨政府抢走”.
[41] Xu 1st §36.3
[42] These are consistent with the analysis under Texas law, where the defence of fraudulent inducement is available to avoid the Promissory Note: Co’s Report §§37, 41
[43] Xu 1st §87
[44] Re ZPMC-Red Box Energy Services Ltd[2022] HKCFI 3256 §56 (Cheng J)
[45] Xu’s affirmation filed in the SDA Application §31
[46] There are significant doubts over whether SDA Application can be initiated where the company has entered into liquidation: Re Shun Kai Finance Co Ltd[2015] 2 HKLRD 264 §§56-64
[47] Draft statement of claim filed in SDA Application, §5(3) where Zeng admitted to have taken place
[48] Co’s Report §§24-32
[49] Xu 1st §91
[50] P’s Report §§43-48
[51] P’s Report §§49-50; Zeng 2nd §§18-21
[52] Zeng 2nd §21, Notarized Secretary’s certificate dated 28 August 2025
[53] P’s Report §§49-63
HCCW658/2025 RE NORTH STAR ELECTRONIC (HONGKONG) LTD
HCCW 658/2025
[2026] HKCFI 1332
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
COMPANIES (WINDING-UP) PROCEEDINGS NO 658 OF 2025
________________________
IN THE MATTER OF the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap. 32 of the Laws of Hong Kong
and
IN THE MATTER OF NORTH STAR ELECTRONIC (HONGKONG) LIMITED (星輝香港股份有限公司) (Company Number 2821408)
________________________
Before:
Hon Linda Chan J in Court
Date of Hearing:
16 February 2026
Date of Judgment:
16 February 2026
Date of Reasons for Judgment:
4 March 2026
________________________
REASONS FOR JUDGMENT
________________________
1. At the second callover hearing of the Petition presented on 22 October 2025 by the petitioner, TMX Logistics, Inc (“Petitioner”), against North Star Electronic (Hongkong) Limited (星輝香港股份有限公司) (“Company”), I dismissed the Petition and ordered the Petitioner to pay the costs to the Company on an indemnity basis with certificate for 2 counsel. These are the reasons for my judgment.
Background
2. The Company is a Hong Kong company incorporated on 29 April 2019. Its share capital is HK$10,000.
3. Mr Xu Chenghui (徐成輝) (“Xu”) is the sole director of the Company.
4. The Company was incorporated by Xu for the purpose of acquiring Tatung Mexico S.A. de C.V. (“Tatung Mexico”) and its 2 subsidiaries namely, the Petitioner and TMX Technologies Inc (“TTI”), a company incorporated in California (together “Group”) from a Taiwan company[1].
5. The acquisition was introduced to Xu by Mr Diau Chan-Hsing (“Diau”), who was the manager of the Group at the time.[2] The Company’s primary asset was a plot of land in Mexico with factory premises (“Mexico Land”) and an adjacent lot (“Adjacent Land”) both held by Tatung Mexico. By an agreement dated 1 March 2021 (“Lease”), Tatung Mexico leased the factory to TTE Technology, Inc. (“TTE”).[3]
6. The Petitioner was incorporated in Texas and has since 6 March 2023 been a subsidiary of the Company, having been acquired by the Company pursuant to the acquisition described in §§4-5 above.
Petitioner’s case
7. The Petitioner’s case, as pleaded in §§5-8 of the Petition, is very simple:
(1) The Company is indebted to the Petitioner in the sum of US$2,648,953 (“Debt”) which comprises (a) a loan in the principal amount of US$2,500,000 advanced by the Petitioner to the Company (“Loan”) pursuant to a Promissory note dated 1 September 2021 (“Promissory Note”) together with (b) interest from 20 November 2021 to 1 September 2025 in the amount of US$148,998.
(2) On 29 September 2025, the Petitioner through its solicitors, Messrs. Fung, Wong, Ng & Lam LLP (“FWNL”), served a statutory demand on the Company requiring it to pay the Debt (“SD”).
(3) The Company failed to comply with the SD. By virtue of s.178(1)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (“CWUMPO”), the Company is deemed unable to pay its debts.
Company’s case
8. The Company filed an affirmation of Xu dated 30 December 2025 (“Xu 1st”) raising 4 grounds in opposition to the Petition:
(1) Ground 1: The Promissory Note contains an exclusive jurisdiction clause (“EJC”) in favour of the court of El Paso County, Texas.
(2) Ground 2: There are bona fide disputes. The Promissory Note was signed pursuant to a fraudulent scheme against the Company whereby it was deceived by Diau into believing that fines would be levied by Mexican authorities on its subsidiary (Tatung Mexico) unless the Company established a new entity to acquire the assets of Tatung Mexico using funds which Diau would cause to be remitted to it (“Remittance”). The Promissory Note was a sham to conceal the purpose of the Remittance to avoid tax fines and was never intended to be enforced. It is in any event voidable for fraudulent misrepresentation as the tax fines were a fiction.
(3) Ground 3: The Petition is an abuse of process as it was presented with ulterior motives by Mr Zeng Bingsen (“Zeng”) to defeat the Texas proceedings commenced by the Company (and Xu) against him.
(4) Ground 4: The Petitioner’s current board lacks standing and authority to present the Petition, and in turn the Petitioner’s solicitors have no authority to sue.
9. It is the Company’s case that the Promissory Note and the Loan formed part of a fraudulent scheme by Diau and Zeng to usurp control of the Company and its subsidiaries from Xu, who is the sole beneficial shareholder of the Company. The alleged fraud arose in this way:
(1) On 26 August 2021, Diau informed Xu that the Petitioner would remit US$2.8 million to the Company, viz the Remittance. On around 2-3 September 2021, Diau coaxed Xu into setting up a new holding company in Mexico to avoid tax fines on Tatung Mexico that would be charged if it owned real estate (“Alleged Tax Fine”) (“1st Misrepresentation”).[4]
(2) Diau caused the Remittance to be made to the Company in 4 tranches on 6 September 2021, 15 September 2021, 9 November 2021 and 2 December 2021. It was only after 2 remittances that on 10 October 2021, Diau raised the need to prepare the Promissory Note as a formality.[5]
(3) On 11 November 2021, Diau sent Xu the draft Promissory Note, claiming that it had to be signed and backdated to a date prior to the first 2 remittances because the tax bureau would check for compliance.[6] Relying on the 1st Misrepresentation, Xu signed it, believing that it was necessary to obscure the purpose of the Remittance to avoid the Alleged Tax Fine.[7]
(4) On 19 April 2022, Diau revived the issue of the Alleged Tax Fine and represented to Xu that he had to exit the Group; otherwise the Alleged Tax Fine could become US$6 million in tax plus a US$4 million in fine.[8] On 20 April 2022, Diau further claimed that due to the Group’s import-export disparity, there could be a potential fine of US$37.5 million[9] (“2nd and 3rd Misrepresentations”).
(5) Relying on the 2nd and 3rd Misrepresentations, in May 2022, Xu temporarily relinquished his shareholding and directorship in the Group by (a) transferring 50% of shares in the Company to each of Zeng and Mr Wu[10] for nominal consideration of HK$5,000 (which was never paid) to be held on trust; (b) appointing Zeng in his place as director of Tatung Mexico and transferred his shares in Tatung Mexico to Mr Wu, to be held on trust; and (c) resigning as director of the Petitioner with Mr Salvador Enrique (Diau’s nominee) appointed in his stead.[11] These steps later enabled Diau and Zeng to misappropriate the Group’s assets.
(6) It transpired that the 1st, 2nd and 3rd Misrepresentations were all false. On 26 July 2024, Xu discovered from a telephone call with the General Manager of TTE that the authorities never raised any issue of tax fines[12]. Further, Xu discovered that the Lease[13] provided that any fines imposed by authorities shall be borne by TTE, such that even if the risks of tax fines were credible, the Group would not be liable.[14]
Legal proceedings between Xu, Zeng, Diau, Petitioner & Company
10. It is not in dispute that even before the presentation of the Petition, the parties had already been embroiled in legal proceedings commenced in Texas and one of the issues raised is the validity of the Promissory Note.
11. It is the Company’s case that in or around 2025, Xu discovered that Zeng and Diau had sold the Mexico Land and the Adjacent Land at an undervalue to their affiliates.[15] Accordingly, on 12 May 2025, the Company and Xu claimed against inter alios Zeng and Diau in Texas for their fraud.[16] By an ex parte Temporary Restraining Order (“TRO”) dated 16 May 2025, the Texas Court restrained Zeng and Diau from transacting on behalf of Tatung Mexico, the Petitioner, and TTI.[17] In breach of the TRO, Zeng and Diau transferred Tatung Mexico’s shares in the Petitioner to an unknown third party on 28 May 2025 (“Share Transfer”).[18]
12. On 18 June 2025, the Petitioner counterclaimed against the Company for the sum under the Promissory Note.[19] This was despite the fact that the maturity date (31 December 2022) had long expired and the Petitioner never before demanded repayment.
13. After the Petition had been presented on 22 October 2025, in November 2025, the Petitioner withdrew its counterclaim in Texas.
14. Despite the Texas Court dismissing the Company’s claims on 9 November 2025 (without hearing oral submissions and oral evidence and with reason set out in one paragraph),[20] the Company filed (1) on 8 December 2025 a Motion for Retrial (effectively an appeal), and (2) on 22 December 2025 a new claim seeking declarations that the Promissory Note is null and void.[21]
15. While the Texas proceedings are ongoing, on 25 July 2025, Zeng (qua 50% shareholder[22]) sought leave to commence a statutory derivative action on behalf of the Company against Xu for his alleged failure to cause the Company to repay the Promissory Note (“SDA Application”).[23]
1st callover hearing
16. The Petition first came to be heard on 5 January 2026. At the hearing:
(1) Counsel for the Petitioner[24] sought an immediate winding up order against the Company on the ground that Xu 1st was filed out of time and in any event, the Debt was indisputable.
(2) Unconditional leave was granted to the Company to file Xu 1st having regard to (a) the complex factual background set out therein including the various legal proceedings commenced by the parties against each other, (b) the time spent by Xu in dealing with the ongoing legal proceedings and obtaining legal opinion on Texas law, and (c) the grounds raised by the Company appears to be substantial.
(3) Mr Danny Tang (appearing with Mr William Wong), counsel for the Company, submitted that the Petition was an abuse of process on the grounds that (a) the Promissory Note contained a EJC in favour of the Texas Court; (b) there was a bona fide dispute on substantial grounds in respect of the Debt; and (c) there were ongoing proceedings in Texas between the Petitioner and the Company which concerned, inter alia, the validity of the Promissory Note.
(4) This Court observed that on the basis of the grounds raised by the Company, the Petitioner should re-consider whether it still wishes to pursue the Petition. The Petition was adjourned to a second callover hearing.
17. Notwithstanding the court’s observation, the Petitioner filed the 2nd affirmation of Zeng dated 26 January 2026 (“Zeng 2nd”) in reply and exhibited an expert report of Rodolfo Mata on Texas law (“P’s Report”) in reply to the expert report of Stephen H. Nickey dated 29 December 2025 exhibited to Xu 1st (“Co’s Report”).
18. For the reasons explained below, each of the grounds raised by the Company is sufficient for the court to dismiss the Petition.
Ground 1: EJC in favour of Texas Court
19. The Promissory Note provides:
“This note is governed by Texas law and the Maker [the Company] consents to the jurisdiction of the courts located in El Paso County, Texas” (“Subject Clause”).
20. Mr Joseph Wong (appearing with Mr Jonathan Kwok), counsel for the Petitioner, submits that there is no issue of EJC on the facts given that:
(1) The Subject Clause is non-exhaustive and/or not binding on the Petitioner as lender.
(2) Only Xu signed on behalf of the Company as “the Maker” of the Promissory Note. Therefore, it is not immediately apparent that the Petitioner as lender consented to the jurisdiction of the Texas Court, or that the Petitioner agreed to resolve all disputes arising from the Promissory Note and/or the Debt in that Court.
(3) By its very nature, a promissory note “is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money, to, or to the order of, a specified person or to bearer” (Chitty on Contracts, 36th ed, §37-189). The Petitioner’s intent to resolve all disputes arising from the Promissory Note is thus far from clear.
(4) The view stated in Co’s Report[25] is “highly questionable”, as the expert could do no better than refer to a single authority which is (a) in the employment context and (b) concerns “conflict of domestic jurisdiction” to suggest that the Promissory Note is a binding EJC.
(5) As stated in P’s Report, for a forum selection clause to be regarded as mandatory or exclusive, “the clause must go beyond establishing that a particular forum will have jurisdiction and must clearly demonstrate the parties’ intent to make that jurisdiction exclusive”[26].
(6) To this end, the use of explicit or mandatory language in the Subject Clause is necessary. It is the opinion of the Petitioner’s expert, the language in the Promissory Note is likely to be held as permissive rather than mandatory. Thus, it “does not preclude the possibility of suit in Hong Kong”[27].
21. On the other hand, Mr Tang submits that under Texas law, the Subject Clause is a valid forum-selection clause requiring both parties’ submission to the Texas Court for the following reasons:
(1) That the Subject Clause expressly identifies the Company but not the Petitioner does not affect the Company’s ability to enforce it.[28] This is supported by In re Brown 441 S.W.3d 405, where a jurisdiction clause which only stated that the employee agreed to submit to the jurisdiction of Virginia was enforced against the employer, such that the employer’s claim lodged in Texas was dismissed.[29]
(2) P’s Report failed to address this. The Petitioner’s contention (§20(4) above) drew 2 distinctions without difference. It is unclear what is meant by “conflict of domestic jurisdiction”. It is well-known that US states are separate law districts for conflict of laws purposes.
(3) The Petitioner’s case boils down to the point that the Subject Clause does not contain mandatory language such as “exclusive” or “shall be brought only”.[30] However, the Subject Clause is not even a conventional “non-exclusive jurisdiction clause” (“NEJC”). Texas Court is the only forum identified, and is not described as “non-exclusive”. Read together with the Texas law clause which immediately precedes, the parties clearly intended their disputes be resolved in Texas. Indeed, the court has construed jurisdiction clauses which contain apparently permissive language (e.g. “may”) as imperative when read in context. Ultimately, it is a question of the parties’ intention.[31]
(4) The Petitioner’s construction is more consistent with how the Promissory Note was drafted in unilateral terms (i.e. from the Company’s perspective as “Maker”) and was executed only by the Company. After all, a jurisdiction clause may in substance and effect confer exclusive jurisdiction on the court nominated, irrespective of whether “exclusive” (or like words) is used.[32]
(5) The Petitioner’s reliance on Chitty§37-189 is a bad point. The Promissory Note represents the Company’s promise to the Petitioner to submit to Texas jurisdiction, which was in turn accepted by the Petitioner. The forum non convenience analysis in P’s Report §§20-32 thus also misses the point.
(6) The Petitioner’s own conduct is consistent with the Company’s construction. The Petitioner invoked the Texas Court’s jurisdiction and filed a counterclaim based on the Promissory Note. Although the Company’s main claim was dismissed (now being appealed), given that the Company filed a new suit in Texas, as a matter of Texas law, the Petitioner must now assert its claim based on the Promissory Note there or risk being barred from pursuing it forever.[33]
(7) That the Petitioner has withdrawn its counterclaim[34] does not change the fact that (a) it had submitted to Texas jurisdiction and that (b) there are ongoing Texas proceedings on the Promissory Note. It only demonstrates the Petitioner’s opportunistic approach to litigation.
(8) A winding-up petition would generally be dismissed where the claim is subject to an EJC, absent countervailing factors such as a dispute that borders on the frivolous or abuse of process (Re Lam Kwok Hung Guy (2023) 26 HKCFAR 119, §105).
(9) Even if the Subject Clause is characterised as a NEJC (which is denied), the parties have consented to submit to a named jurisdiction (Texas). Where proceedings have been instituted in the named forum, the party who seeks to contest the appropriateness of that forum has a very heavy burden as the effect of an NEJC is in practice the same as an EJC.[35] The Petitioner first counterclaimed on the Promissory Note in Texas, and only later presented the Petition. The Petitioner is impermissibly challenging the propriety of Texas’ jurisdiction over the Promissory Note through the backdoor.
(10) The Company’s defences (Ground 2) are clearly not frivolous. Consistent with the parties’ bargain, they should be resolved in Texas.
22. In my view, the arguments advanced by Mr Tang are well-founded.
(1) There is no requirement that the Subject Clause must be couched in mandatory or exclusive term as contended by Mr Wong. The real issue is whether the parties have agreed to submit their dispute on the Promissory Note to the named forum. The evidence before the court shows that the parties clearly intended to submit any dispute arising out of the Promissory Note to the Texas Court, being the only jurisdiction identified in the Promissory Note. This is reinforced by the Petitioner’s only conduct in making a counterclaim against the Company for the sum under the Promissory Note.
(2) Although the Promissory Note was only signed by Xu on behalf of the Company (as maker of the Promissory Note), it was accepted by the Petitioner. The act of accepting (and relying on) the Promissory Note is sufficient to make the Petitioner a party to the Promissory Note and be bound by its terms including the Subject Clause. The position is analogous to In re Brown, where the Texas Court held that the forum- selection clause contained in the employment agreement was binding upon the employer even though it was only signed by the employee.
23. The Petitioner is bound by the Subject Clause and should bring its claim under the Promissory Note in the Texas Court.
24. The Petitioner has not identified any countervailing factors, let alone exceptional circumstances, which would justify the court exercising its discretion to allow the Petitioner to act inconsistently with the Subject Clause. The belated argument raised by Mr Wong that the factual matters raised by the Company is “a dispute that borders on the frivolous” is untenable. The Petitioner has not in Zeng 2nd identified any factual matters or documents which go anywhere near to showing that the facts and matters set out in Xu 1st (some of which are supported by contemporaneous documents including communications with Diau and Zeng) can be characterised as “borders on the frivolous”.
Ground 2: Bona fide dispute on substantial grounds
25. The principles are well established and have been summarised in Re Elion International Investment Ltd [2026] HKCFI 465, §29. In short, a company which disputes a petitioning debt bears the burden to show a bona fide dispute on substantial grounds and for this purpose, must adduce sufficiently precise evidence which are believable against indisputable background. Where oral evidence is required to decide a substantial dispute of fact, the petition will be dismissed. Where a debt has been acknowledged, the evidence and argument relied on to establish a substantial ground in opposition will have to be compelling.
26. Mr Wong contends that the Company fails to discharge the burden of showing that it has a bona fide dispute on substantial grounds on the Debt for the following reasons:
(1) There is no dispute that the Promissory Note is evidence of the Company’s indebtedness to the Petitioner.
(2) Despite Xu’s assertion that the Promissory Note is liable to be set aside on the ground of misrepresentation and/or fraud, no steps have been taken to do so since the maturity date (31 December 2022). Taking the Company’s case at its highest, Xu discovered the misrepresentations in July 2024[36]. Yet, even after the SD had been served, the Company did not take any proceedings to contest the validity of the Promissory Note.
(3) There is no sufficiently precise evidence of the alleged misrepresentations and/or fraud perpetrated on the Company. The Petitioner, the Company, Xu, Diau and Zeng are separate legal entities. Insofar as Xu alleges there are disputes between him and Diau/Zeng, it is unclear how that would affect the Petitioner’s right to petition for the winding up of the Company.
27. I am unable to accept Mr Wong’s arguments. Far from no sufficiently precise factual evidence, the Company has adduced contemporaneous documents in support of the alleged misrepresentations and fraud. The allegations, which the Petitioner does not admit, are not ones which can or should be determined summarily or without hearing oral evidence from the relevant parties.
28. Mr Tang submits that the Company has raised bona fide defences based on sham and misrepresentation in that:
(1) The Petitioner has no response to the Company’s case on misrepresentations and fraud other than a general “non admission”.[37] The Petitioner’s failure to deny the Company’s case should be taken against it as it must know that lying on oath will give rise to penal consequences.[38]
(2) A sham exists where parties intended that the documents or acts (a) would not create the legal rights or obligations they appear to create and (b) would mislead a third party into believing those rights and obligations were created. The parties need not share the same motivation.[39]
(3) Xu executed the Promissory Note under the belief – induced by Diau – that it was necessary to conceal the true purposes of the Remittance (i.e. to fund the acquisition of the Mexico Land) to avoid the Alleged Tax Fine. Meanwhile, Diau procured the Petitioner to issue the Promissory Note, knowing that no such fine would ever exist. Hence, neither party intended the Promissory Note to be enforced according to its terms. Diau’s representations were documented by WeChat records.[40] Xu had no reason to doubt Diau’s intentions, as Diau dealt with the authorities and the operations on the ground.[41] The Promissory Note is also independently voidable for the 1st Misrepresentation as such fines never existed.[42]
(4) The Petitioner’s arguments (set out in §26 above) is the sum total of the Petitioner’s response. None withstands scrutiny in that:
(a) §26(1) is immaterial as the Company does dispute the alleged liability to the Petitioner.
(b) §26(2) is a forensic point which supports the Company’s case: the Promissory Note was never intended to be enforced, and the Petitioner never sought to recover the alleged Debt since 31 December 2022 until these proceedings. It is senseless to criticise the Company for not commencing proceedings to “contest the validity of the Promissory Note” prior to being served with the SD. In any event, the Company filed a new claim in Texas in December 2025 contesting the Promissory Note.[43]
(c) §26(3) ignores the particulars of misrepresentations and sham detailed in §9 above.
29. I agree that for the reasons advanced by Mr Tang, there is a bona fide dispute on substantial grounds that the Promissory Note is not binding or enforceable against the Company.
Ground 3: Abuse of process
30. Mr Tang submits that it is an abuse of process if the petitioner does not really want to obtain liquidation, but simply to put pressure on the target; or the petitioner does want the relief sought, but he is not acting in the interests of the general body of creditors.[44] The Petition is presented for a collateral purpose given that:
(1) Zeng is both the nominal plaintiff in the SDA Application and the Petitioner’s director. He is simultaneously seeking to sue Xu on behalf of the Company, whilst also seeking (via the Petitioner) to wind up the Company. This is diametrically inconsistent and abusive because: (a) in the SDA Application, Zeng affirmed that the Company is financially sound and is able to indemnify the cost of the intended action;[45] yet, as director of the Petitioner, he swore an affidavit verifying the Petition; (b) if the Company is wound up, the liquidators (rather than Zeng) would take carriage of the intended derivative action.[46]
(2) These manoeuvres were brought to frustrate the Texas proceedings and to stretch Xu and the Company thin. With the Company wound up, Xu would lose control and be unable to prosecute the Texas proceedings against Zeng. Whilst the Company has demonstrated every intention to dispute liability under the Promissory Note in Texas, the Petitioner has consistently been forum-shopping.
31. Mr Wong does not dispute that Zeng has made inconsistent assertions concerning the solvency of the Company in his affirmation filed in support of the SDA Application. Nor does Mr Wong advance any arguments to justify or explain why Zeng’s act in causing the Petitioner to present the Petition and pursuing the SDA Application is not abusive.
32. Nonetheless, Mr Wong argues that the threshold for finding abuse of process on the part of the Petitioner on the basis of improper advantage in parallel and/or related proceedings is high. Reliance is placed on Ricco (International) Co Ltd v Uni-Harvest International Ltd [2020] HKCFI 201, where DHCJ Abraham Chan SC said that (1) a party alleging abuse of process must properly substantiate its claim. Repeated assertions that the petition was presented for collateral purpose unsupported by any meaningful particulars will not be entertained by the court; (2) the mere fact that a party presents a petition when related proceedings are still afoot cannot, without more, be regarded as an abuse as a creditor’s right cannot be displaced merely because the company may have a claim against it that is disputed in litigation; and (3) the company has no counterclaim against the creditor in the related proceedings is a factor that the court may take into account.
33. I do not think that Ricco assists the Petitioner. In that case, the petitioning debt arose out of a costs order and the petitioner was a judgment creditor and was entitled ex debito justitiae to a winding up order. The suggestion that the presentation of the petition by the petitioner was an abuse of process only fell to be rejected.
34. Here, the validity of the Promissory Note has been the subject matter of the dispute in the Texas proceedings and is hotly disputed by the Company.
35. Further, in view of the conclusion that there is a bona fide dispute on substantial grounds in respect of the validity of the Promissory Note and hence the liability of the Company to pay the Debt, the Petitioner is not a “creditor” within the meaning of s.179(1) of CWUMPO and, therefore, has no locus to present the Petition (Re Hyundai Engineering & Construction Co. Ltd [2002] 2 HKLRD 71, §7, citing Mann v Goldstein[1968] 1 WLR 1091). As the Petitioner was aware of the dispute raised by the Company regarding the validity of the Promissory Note by 15 October 2025 at the latest (see §40 below), the presentation of the Petition on 22 October 2025 constituted an abuse of process.
Ground 4: Lack of authority
36. Mr Tang submits that the Share Transfer is liable to be set aside, such that the Petitioner’s current board (Diau, Zeng and Enrique) has no proper authority to present and prosecute the Petition. His arguments run like this:
(1) In breach of the TRO, Zeng caused the Share Transfer.[47] This raises a serious issue over Zeng’s authority to procure the Petitioner to present this Petition because the Texas Court may order that the Share Transfer be reversed, as it was null and void and effected without the consent of the Company or Xu.
(2) Given that the Petitioner’s current board was not appointed by the Company but by the transferees, the Petitioner lacks authority to prosecute the Petition.[48]
(3) The Company has passed a resolution for removing the current board.[49] But for the wrongdoers’ control, it would have been given effect.
(4) P’s Report contends that the TRO is void because the Texas Court had allowed its jurisdictional challenge.[50] But that decision is under appeal. The self-serving secretary’s certificate and written board resolution adduced by the Petitioner[51] are beside the point. The Petitioner cannot pull itself up by its own bootstraps when its board lacks authority in the first place.
37. Mr Wong does not accept that the Petitioner lacks proper authority to sue for 2 reasons:
(1) The evidence adduced by Zeng shows that he has been duly authorised by the Petitioner to commence proceedings against the Company[52].
(2) The Company’s challenge to Zeng’s authority to sue on behalf of the Petitioner is answered by P’s Report[53]. Importantly, having reviewed the relevant law and evidence, the Petitioner’s expert concluded that “the present [Petitioner] board and officers and supports the authority to cause [the Petitioner] to pursue [the Promissory Note] enforcement and remedies, including winding up proceedings, in the Hong Kong Proceedings.”
38. The question whether the Petitioner has proper authority to sue is a matter of Texas law, being the law governing the internal affairs of the Petitioner. It is not an issue which can or should be determined by this Court.
Costs
39. As stated above, the Petitioner was well aware of the grounds raised by the Company in opposition to the Petition including the dispute on the validity of the Promissory Note and hence the lack of locus to present the Petition as a creditor. The position is no different from the petitioner in Re Hyundai where Kwan J (as she then was) ordered the costs of the petition to be paid by the petitioner on an indemnity basis.
40. Indeed, the conduct of the Petitioner in presenting the Petition is even more abusive than the petitioner in Re Hyundai as the Company’s solicitors did on 15 October 2025 (i.e. one week before the Petition was presented) wrote to FWNL setting out the 4 grounds (which are materially the same as the 4 grounds raised in Xu 1st) as to why “any winding-up petition based on the [Debt] is wholly misconceived and bound to fail”, and “each of the ground is sufficient to warrant the dismissal of any such winding-up petition”. The Petitioner simply ignored the Company’s letter and presented the Petition on 22 October 2025. Such conduct on the part of the Petitioner is abusive and warrants the court ordering the costs of and occasioned by the Petition to be paid by the Petitioner on an indemnity basis, with certificate for 2 counsel.
(Linda Chan)
Judge of the Court of First Instance
High Court
Mr Joseph Wong and Mr Jonathan Kwok, instructed by Fung Wong Ng & Lam LLP Solicitors, for the Petitioner
Mr Danny Tang and Mr William Wong, instructed by King & Wood Mallesons, for the Company
Ms Teresa Kin, of Official Receiver’s Office, for the Official Receiver
[1] Tatung Co., Ltd
[2] Xu 1st §§7-8
[3] Xu 1st §§12, 20
[4] Xu 1st §§27-28; WeChat messages
[5] Xu 1st §32; WeChat messageon 10 October 2021 at 21:53:06 (上次送汇95万去星辉，我们主计有意见，我这边先把手续补齐（要有董事会议记录）后主计才同意下次汇款，我会在下周补齐).
[6] Xu 1st §§34-35; WeChat messageon 11 November 2021at 22:45:33(会计师甚至税务单位一定会查是否公司的汇款行为有遵守公司法行事。所以我请律师把日期往前挪).
[7] Xu 1st §36
[8] Xu 1st §39; WeChat message on 19 April 2022 at 23:29:48
[9] Xu 1st §40; WeChat message on 20 April 2022 at 8:49:35
[10] Mr Wu Guanghua, brother-in-law of Xu’s wife: Xu 1st §43.3
[11] Xu 1st §§45.1-45.3
[12] Xu 1st §60.2
[13] Clause 3(b)(iii) provides “Parties hereby jointly and severally represents and warrants that: … (iii) During the term of this agreement, any fines imposed by the authorities and other risks due to violation of IMMEX regulation, shall be responsible by [TTE]”
[14] Xu 1st §§60-61
[15] Xu 1st §65
[16] Xu 1st §69; see Second Amended Petition filed in Texas Court (Prayer for Relief)
[17] Xu 1st §§71, 73. An Agreed Limited Temporary Injunction was further issued on 13 June 2025 to enjoin Zeng and Diau from conducting any transactions on behalf of the Group
[18] Xu 1st §94.1
[19] Petitioner’s counterclaim filed in Texas Court §§11-13
[20] Xu 1st §§75, 84
[21] Xu 1st §§86-87
[22] The Company contends that Zeng has been holding the 50% shares in the Company as a result of the fraudulent scheme: Xu 1st §45.1(b)
[23] HCMP 1244/2025; Xu 1st §23. The hearing took place on 12 February 2026.
[24] Mr Kaiser Leung
[25] Co’s Report §12
[26] P’s Report §15
[27] P’s Report §§18-19
[28] Co’s Report §§8-12
[29] That clause provided relevantly that “Employee agrees to submit to the jurisdiction of those courts, waiving the defences of lack of personal jurisdiction or inconvenient forum”: Co’s Report §12
[30] P’s Report §§13-19; Petitioner’s skeleton §§17-18.
[31] Bank of China Ltd v Yang Fan [2016] 3 HKLRD 7 §§31-35 (To J) (applying contractual interpretation principles under Hong Kong law).
[32] The Export-Import Bank of China v Taifeng Textile Group Co Ltd[2018] HKCFI 1840 §59.
[33] Co’s Report §20
[34] Petitioner’s Notice of Nonsuit dated 12 November 2025
[35] Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631 §§27-28, 31, 33(1), 37.
[36] Xu 1st §60
[37] Zeng 2nd §3
[38] Sin Kwok Lam v Chan Ting Lai[2025] HKCFI 1435 §§54-55 (DHCJ Alan Kwong)
[39] 储惠敏v Kwok Ching Ching [2024] HKCFI 1380 §§45, 49
[40] WeChat messageon 10 October 2021 at 21:53:06 (raising the need to prepare documentations after 2 instalments had been remitted); WeChat messageon 11 November 2021at 22:45:33(explaining the need to backdate purportedly because it may be reviewed by the auditors or the tax bureau). On 3 September 2021, Diau asserted that: “要罚多少就多少，税务局说了算…所以要尽快办过户，要不然很被动，辛辛苦苦赚的钱都会被老墨政府抢走”.
[41] Xu 1st §36.3
[42] These are consistent with the analysis under Texas law, where the defence of fraudulent inducement is available to avoid the Promissory Note: Co’s Report §§37, 41
[43] Xu 1st §87
[44] Re ZPMC-Red Box Energy Services Ltd[2022] HKCFI 3256 §56 (Cheng J)
[45] Xu’s affirmation filed in the SDA Application §31
[46] There are significant doubts over whether SDA Application can be initiated where the company has entered into liquidation: Re Shun Kai Finance Co Ltd[2015] 2 HKLRD 264 §§56-64
[47] Draft statement of claim filed in SDA Application, §5(3) where Zeng admitted to have taken place
[48] Co’s Report §§24-32
[49] Xu 1st §91
[50] P’s Report §§43-48
[51] P’s Report §§49-50; Zeng 2nd §§18-21
[52] Zeng 2nd §21, Notarized Secretary’s certificate dated 28 August 2025
[53] P’s Report §§49-63