Table of Contents
1. Overview of the core of the incident
The late Hong Kong "Shop King"Deng ChengboIn May 2024, his sons, Deng Yaosheng and Deng Yaowen, were ordered by the High Court to repay HK$66.08 million in principal and HK$62.5 million in interest (a total of approximately HK$128 million) for defaulting on debts owed to Bao Yuan Finance Co., Ltd. As the judgment was not fulfilled, the financial company further filed a lawsuit in court, requesting the forced sale of two properties in Fook Cheong House, King's Road, Quarry Bay owned by the two persons to pay off the debt.
II. Legal Procedures and Key Points
The court's decision
According to the Hong Kong High Court Ordinance, creditors can apply for a "compulsory execution order" to require the auction of the debtor's assets to repay the debt. In this case, the finance company has obtained a winning judgment (case number HCMP1672/2024) and has now entered the execution stage.
Property disposal method
The finance company requires that the property be sold by public auction or private sale, with the proceeds used to repay debts first and the remaining amount going to the defendant. Hong Kong courts usually commission licensed surveyors to assess the market value of properties to ensure that transactions are fair.
Interest Calculation Disputes
The accumulated interest is as high as HK$62.5 million, which may involve high-interest loan terms (such as an annual interest rate exceeding 20%) or overdue penalty interest. Such high interest rates are regulated by the Money Lenders Ordinance in Hong Kong. If the interest rate exceeds the statutory limit (48% per annum), the debtor can apply for a reduction.
3. Property Value and Debt Coverage Analysis
Background of Fook Cheong Building: Located on King's Road, Quarry Bay, it is an old building area and most of the units on the first floor are shops or converted residences. Referring to the market data in 2024, the unit price of similar properties in the area is approximately HK$150,000-200,000 per square meter.
Debt gap risk: If the total valuation of the two units is less than HK$128 million and is still insufficient to repay the debt after the sale, the finance company may continue to pursue other assets. The Deng family owns a large number of properties, and it is not ruled out that more assets will be pursued in the future.
IV. Potential Impacts and Industry Warnings
Impact on the real estate market
Forced auctions can depress prices in an area, especially if the property is sold as a rush sale. The supply of commercial properties in Quarry Bay has increased in recent years, and the value of old buildings has fluctuated greatly.
Warning to borrowers and lenders
Creditor risk: Finance companies need to carefully assess the value of collateral and avoid over-reliance on a single asset;
Lessons for debtors: High-leverage operations increase risks during a rising interest rate cycle, and financial planning needs to be strengthened after inheriting assets.
5. Subsequent focus
Whether the court will approve a forced sale and the result of the property valuation;
Whether the Deng brothers will file an appeal or debt restructuring;
Whether the finance company will further pursue other mortgaged assets.
Conclusion: This case reflects the potential risks of usury and real estate investment in Hong Kong, and also highlights the efficiency of the judicial system in debt enforcement. Whether the Deng family can resolve the crisis through asset restructuring will become a typical case for observing the debt chain of commercial real estate in Hong Kong.
Deng Chengbo(1934 - May 14, 2021), known as "Uncle Bo",Hongkongmerchant, famous for investing in a large number of commercial properties. At its peak, he owned more than 200 industrial and commercial properties in Hong Kong and was known as the "Shop King of Hong Kong".
Deng YaoshengStan Tang (1986-), Hong Kong entrepreneur, currentlyStan GroupPresident,Easy Communications Group(Hong Kong Stock Code: 8031) Chief Executive Officer and Executive Director, formerPine Care Group(Hong Kong stock code: 1989) Chairman and Executive Director. FatherDeng Chengbo.
Deng Yaosheng has won the CanadianUniversity of Western OntarioIvey Business SchoolExecutive MBA in International Business andThe Hong Kong Polytechnic UniversityMaster in Innovation Leadership for Senior Executives. In 2019, Deng Yaosheng wonHong Kong Business Professional Validation CentreHonorary Fellow.
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