The provisional liquidators of China Metal Recycling Holdings Ltd. said the company paid out more than HK$1 billion ($129 million) in the two weeks before their appointment.
The funds were paid to parties including some of the companies the liquidators have sued for damages, Douglas Lam, a lawyer for the liquidators, told Hong Kong’s High Court today.
The liquidators, appointed last month at the request of the city’s Securities and Futures Commission, claim China Metal’s founding chairman, his wife and 10 companies orchestrated false trading schemes, disclosed false or misleading information to China Metal and paid dividends on inflated profit.
“There’s no evidence whatsoever related to the claims for the moment” against Chun’s wife Lai Wun Yin, her lawyer Victor Joffe told the court today. Judge Jason Pow agreed to discontinue an injunction against Lai.
The liquidators obtained an injunction on July 30 freezing more than HK$1.6 billion of the defendants’ assets. Wellrun Ltd., through which Chun holds his stake in China Metal, has objected to the regulator’s application for liquidation.
Alexander Lee, a solicitor representing Chun and Wellrun, declined to comment today on behalf of his clients.
China Metal, which described itself as the nation’s biggest scrap-metal dealer, inflated the size of its business to gain a listing in Hong Kong in 2009, the regulator said July 29. China Metal falsified a majority of purchases from its three major suppliers from 2007 to 2009, the regulator said.
Shares of China Metal traded in Hong Kong have been suspended since January.
Chun and Lai founded the company in 2000, according to the company’s website.
The cases are China Metal Recycling Holdings Ltd. and Chun Chi Wai, HCA1412/2013 and Securities and Futures Commission and China Metal Recycling, HCCW 210/2013, both in Hong Kong’s Court of First Instance.