Bennion Ltd (BL) is a logistics company owned by the Kam family.

Terry Kam holds 40% of its shares and is also the Chief Executive Officer and Chairmanof the board of directors, whilehis brothers Sam and Jay each hold 30%.

On 13 March 2017, BL obtains a loan from HL Bank; under the terms of the loan, BL grants to HL Bank a "first fixed charge" over all its bank accounts, including 86810003450 to which all customer payments are directed ("receivables deposit account").

The loan agreement obliges BL not to "sell, assign, factor, transfer or deal with the [receivables deposit] account without the consent of the Bank".

To enable BL to pay its creditors, the following arrangement is made. The bank opens a payments account 86810003839, by which BL pays its trade creditors. In the course of each day, the bank will honour payment orders issued by BL and cheques drawn on the payments account. At the end of each day, the debit balance resulting from payments out of this account are reduced to zero by an automated bank transfer from the receivables deposit account.

In anticipation of several large payment obligation sin May 2019,BL sells to Rayland Ltd (RL) a property in Hung Hom ($17 million), and theshares in Doodle Ltd(DL), a private company which holds certain intellectual property rights ($3 million).

RL is a company started by Donald, who happens to be Sam's son. Donald holds 80% of the shares in RL while the remainder is held by his uncle, Jay. For the Hung Hom property, RL is willing to provide a substantial payment of 25% of the purchase price upon signing the sale agreement, with the remainder payable within 3 weeks. The market practice is for payment of 10% of the purchase price at the point the agreement is signed, with the remainder payable at the completion, which is usually 12 weeks later. In return for the liquidity assistance, RL dictates the price of $17 million although a similar property was sold for $20 million a week earlier. The price for the shares is based on a valuer's report. Both agreements are signed on 1 March 2019. The initial sum for the Hung Hom property is paid. Completion takes place on 5 April 2019. The share transfer and purchase price for the shares are also made on 5 April.

On 4 April 2019, a creditor files a winding up petition against the company; on 10 May 2019, the court orders that the company be wound up. As the assets are insufficient to pay all unsecured creditors and there are outstanding wages owed to employees, the liquidator would like to use for their benefit section 265(3B) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance. Further, the liquidator wishes to fully enforce the clawback and related rights of the company to swell the assets available for distribution.

Carlton Ltd (CL), a joint venture company held by BL (70%) and Plato Ltd (30%),obtains a loan

amounting to $2 million from PK Bank in June 2018. The relationship between the joint venturers

sour. Pip, the managing director of Carlton who is appointed by BL, begins channelling customer orders to Quod Ltd (QL), a whollyowned subsidiary of BL. Without a sufficient revenue stream to pay its liabilities, CL is unable to pay its creditors, including PK Bank.A winding up order is made against CL; the liquidator seeks to argue that the business of CL was operated in a fraudulent manner and that Pip and QL are liable for its debts.

Advise the liquidator (L).