On October 8, 2019, the Intermediate People's Court of Taizhou City ruled to accept the bankruptcy reorganization case of Zhejiang GEMSY Electrical & Mechanical CO., LTD. (hereinafter referred to as " GEMSY Electrical & Mechanical "). JunHe represented Shang Gong Group Co., Ltd. (Stock Code: 600843, hereinafter referred to as "ShangGong Group"), on behalf of ShangGong Group and its affiliates, participated in the whole process of the restructuring of GEMSY Electrical & Mechanical as a creditor and restructuring investor, and assisted the restructuring investor to successfully transfer the underlying assets of the restructuring in a "sale restructuring" process of GEMSY Electrical & Mechanical. JunHe has been recognized by ShangGong Group and its designated restructuring investors, management and the court for its diligent work.
ShangGong Group is a Sino-foreign equity joint venture company issuing A and B shares on the Shanghai Stock Exchange. It is the first listed company in China's sewing machinery industry. The Company is headquartered in Shanghai and has over 30 branches and subsidiaries. The company's core business is the research, development, production and sale of industrial sewing equipment and domestic sewing machines. It is also involved in modern logistics, international trade and financial leasing. On September 2, 2015, ShangGong Group (which holds 60% equity interest) and Zhejiang GEMSY Electrical & Mechanical CO., LTD. (which holds 40% equity interest) established a joint venture, Zhejiang Shanggong GEMSY CO., LTD. ("ShangGong GEMSY "). ShangGong GEMSY has now become the major production base of electromechanical industrial sewing machines in China.
Given that GEMSY Mechanical & Electrical had filed an application for entry into the reorganization proceedings by its creditors and held 40% equity interest in ShangGong GEMSY and "gem" brand trademarks registered inside and outside China ("Reorganized Assets"), ShangGong Group arranged its affiliates to participate in the reorganization proceedings as the investor of the reorganization and accept the transfer of the Reorganized Assets so as to hold 100% equity interest in GEMSY Mechanical & Electrical and become the owner of such brand trademarks. JunHe assisted the company’s affiliates in conducting a thorough investigation into the reorganization progress and the status of GEMSY Mechanical & Electrical as an investor of GEMSY Mechanical & Electrical. JunHe’s team prepared the reorganization investment registration documents and participated in the registration process, negotiated with the manager for several rounds and prepared the Reorganized Investment Agreement and other core transaction documents. JunHe proposed to directly accept the Reorganized Assets by means of a "selling-style reorganization", which was recognized and adopted by the investors, the manager and the court. Moreover, in order to ensure the reasonableness of the investment consideration and avoid being questioned, it was decided that the manager should auction the Reorganized Assets publicly based on the investment consideration determined by ShangGong Group, and that ShangGong Group will be purchased by ShangGong Group as the investor after no bids.
On May 27, 2021, ShangGong Group completed the registration formalities for the transfer of 40% equity interest held by GEMSY Mechanical & Electrical through its affiliate. Upon completion of the registration formalities, ShangGong Group became a wholly owned subsidiary of ShangGong Group, and would continue to go through the formalities for the delivery of the relevant assets such as trademarks in accordance with the Reorganized Investment Agreement. JunHe also assisted ShangGong Group’s affiliate in preparing and submitting the relevant documents to the manager in the capacity of a creditor, communicated with the manager and followed up the progress of the confirmation of creditor's rights. JunHe attended creditors' meetings and voted on behalf of ShangGong Group, followed up the implementation of the reorganization plan in order to pay off the creditor's rights in a timely manner, and ultimately assisted the creditors in successfully declaring their creditor's rights and obtaining confirmation and repayment.
In this project, JunHe participated in the reorganization process of GEMSY Mechanical & Electrical on behalf of its clients, acting as both investor and creditor. After conducting six months of communication and negotiation with the manager on the reorganization proposals, JunHe eventually endeavored to successfully accept the transfer of the underlying assets of GEMSY Mechanical & Electrical by participating in the "sell-off reorganization". This approach not only achieved the clients' investment objectives at a relatively low price, but also avoided the clients being implicated in any potential debts arising from the transfer of the shares of the restructured enterprise.