High Court Orders 3 Family Firms To Close

Source : The Straits Times, Dec 03, 2007

IN THE end, the wish of the eldest of three feuding brothers - a clean break - prevailed.

Still solvent family firms worth more than $100 million will be wound up, on a High Court judge's orders.

A liquidator, appointed to do this, will use the proceeds to pay off $34 million in debts. The brothers - two doctors and an architect - will then get their due shares.

In her judgment published last Tuesday, Justice Judith Prakash noted that the brothers could not get along with each other and had their own ideas about how 'the companies and the family fortunes should be dealt with'.

The rift had 'translated into fractures in the companies' and a logjam over the debts.

Patriarch and property investor Chow Cho Poon, who died a decade ago, had set up three companies which held 29 properties in Singapore, Malaysia and Hong Kong valued in 2005 at over $100 million.

The properties include Chow House in Robinson Road, an office building described as the 'jewel in the crown' in court papers.

His wife made each of their three sons directors of all three companies, hoping they could work together.

But now, five years after her death in 2002, the feud has led to legal wrangles.

All three siblings, now in their 60s, live in Hong Kong.

Eldest sibling Chow Kwok Chi through Senior Counsel Jimmy Yim of Drew & Napier sought to wind up the companies so that the brothers could make a clean break from one another.

He pointed out that as long as the companies exist, their father's estate would remain unadministered because of the unpaid $34 million debt.

Second brother Chow Kwok-Chuen opposed the move. He argued through lawyer Ang Cheng Hock from Allen & Gledhill that Kwok Chi had not alleged any loss of confidence or lack of probity in his conduct in relation to the running of the companies.

Youngest brother Kwok Ching also contested the suit, arguing through lawyer Peter Low from Colin Ng & Partners that if there was to be a winding up, the reason should be his siblings' alleged 'oppressive conduct'.

Justice Prakash said in view of the 'litigation history' and 'the complex nature of the relationships among the brothers, it did not make sense for this court to stand aside and allow the situation to deteriorate further'.

The judge apparently broke new legal ground in ordering the winding up of firms that were not insolvent.

'The desire for a clean break is not an established ground for a winding up application. It is a concept found in matrimonial matters rather than in commercial ones.

'In a case like this, however, where the dispute may be considered as springing from domestic relations, it may have some place,' said Justice Prakash.