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JunHe Assists Guxu Coalfield and Its Three Affiliates During Its Procedural Consolidation and Bankruptcy Reorganization


On December 16, 2020, the People's Court of Gulin County, Sichuan Province (hereinafter referred to as "Gulin court") approved the reorganization plan of Sichuan Guxu coalfield development Co., Ltd. (hereinafter referred to as "Guxu coalfield "), Sichuan Chuannan Coal Industry Co., Ltd., Luzhou Guxu Coal Power Co., Ltd. and Sichuan Guxu coalfield Guansha Coal Industry Co., Ltd. (hereinafter referred to as "Guxu coalfield and its three affiliates companies"), terminating the bankruptcy reorganization procedures of Guxu coalfield and its three affiliate companies. JunHe, as a member of the bankruptcy administrator of Guxu coalfield and its three affiliate companies, was fully responsible for the work of the bankruptcy reorganization.

Sichuan Guxu coalfield development Co., Ltd. is a key enterprise located in Luzhou City. It undertakes the important task of the Sichuan Provincial Party Committee to "accelerate the development of the Guxu mining area and ensure coal supply". In recent years, Guxu coalfield and its three affiliate companies were affected by multiple internal and external factors, including operating losses and capital chain rupture, which gradually led to a serious debt crisis. At the beginning of 2019, Luzhou City Municipal Government decided to promote judicial restructuring to effectively deal with the debt risk of Guxu coalfield and its three affiliate companies, so as to achieve reform and extrication. From the end of 2019 to the beginning of 2020, the bankruptcy reorganization applications of Guxu coalfield and its three affiliate companies were accepted by the Court. After the Luzhou Intermediate People's Court consulted the Sichuan Higher People's court, it decided to adopt a procedural merger and reorganization, and designated the Gulin Court for the centralized jurisdiction.

In this case, the debt relationship and capital contribution relationship among the affiliated members was complex. The number of employee creditors and operating creditors was large and the pressure to maintain stability was extremely high. The demands of the main financial creditors were obviously different and communication and coordination between the parties was difficult. Due to the ongoing impact of the COVID-19 pandemic, the case was repeatedly postponed. All these factors lead to much uncertainty of whether the reorganization process could be carried out smoothly, and also put forward higher requirements for the professional ability of the management administrators. JunHe, as the main member of the management team, made long-term efforts in the process of the reorganization, and guided Guxu coalfield and its three affiliate companies to formulate the draft reorganization plan. Finally, the draft reorganization plan was voted by the creditors' meeting and approved by the Gulin Court.

The successful reorganization of Guxu coalfield and its three affiliate companies not only realized the rebirth of Guxu coalfield and other enterprises, but also achieved a very good social effect. This case is the concrete embodiment of the implementation of the policies of "preventing and resolving major risks" and "actively and steadily dealing with the debts of zombie enterprises and de-productive enterprises". It is also a typical case of rescuing local state-owned enterprises by means of judicial restructuring, which has an exemplary role in resolving the debt crisis of local enterprises. The performance of JunHe's team has been highly praised by the different enterprises and the relevant government departments.

JunHe’s team was led by Partner WU, Lei Partner YANG, Li and Partner DONG, Ming. The main undertaking partner was Ms. DONG, Ming.

JunHe is the only Chinese law firm to be admitted as a member of Lex Mundi and Multilaw, two international networks of independent law firms. JunHe and selected top law firms in major European and Asian jurisdictions are “best friends.” Through these connections, we provide high quality legal services to clients doing business throughout the world.