2022.12.29
The reorganization plans of 20 companies including Dongying Fangyuan Nonferrous Metals Co., Ltd. (“Fangyuan”) were recently approved by the Dongying Intermediate People's Court. As Fangyuan’s bankruptcy administrator, JunHe helped the company to achieve significant results in its reorganization and relief work.
Fangyuan processes copper, gold, silver, nickel, lead, zinc and other metal materials. It has significant market and industrial status in the domestic copper smelting sector and has consistently ranked in the top 50 non-ferrous metal players in China for many years. Its leading product "Lufang (鲁方)" is a high-purity copper cathode and a famous brand in Shandong Province. Lufang is a national inspection-free product, a registered brand on the Shanghai Futures Exchange and a registered brand on the London Metal Exchange. Due to various internal and external factors, Fangyuan faced a debt and business crisis at the end of 2019. With the support of various government authorities, Fangyuan implemented an out-of-court restructuring with its domestic and foreign creditors, achieving some positive results but ultimately failing to materially resolve the crisis. On January 26, 2022, the Dongying Intermediate People's Court, based on applications by the creditor’s banks, ruled that Fangyuan’s core business should be reorganized in bankruptcy and through public selection procedures, appointed JunHe as the administrator. On June 9, after an application by JunHe and a public hearing in accordance with the law, the court ruled that 20 affiliated companies should be reorganized in bankruptcy in a substantially consolidated manner. After the public selection of investors, JunHe completed the negotiation and formulation of the draft reorganization plan and held a second creditors' meeting on August 26 to consider the draft reorganization plan. After the meeting, the domestic and foreign creditors carried out internal decision-making procedures. The creditors finalized the voting process in early December, and each voting group of creditors voted to approve the draft reorganization plan.
During Fangyuan’s restructuring procedures, JunHe, under the supervision and guidance of the court and in strict compliance with the principle of "marketization and rule of law", set up an interface between the out-of-court debt committee and the in-court debt committee. JunHe also provided a mechanism for communication and consultation and carried out the restructuring procedure based on openness. There was full participation of the debt committee in the key stages, the creditors had a large amount of autonomy during important matters, and there was full consultation between the debtors and the major shareholders on key matters such as the audit and evaluation reports. Through the nationwide open recruitment of investors and two rounds of evaluations by an evaluation committee composed of the debt committee and JunHe, a state-controlled listed company was finally introduced as a strategic investor. By inviting major creditors to participate in the negotiation of the terms of the reorganization investment agreement, a draft reorganization plan was formed with a high degree of acceptance by all the parties, which protected to the greatest extent the legitimate rights and interests of all the participants. This case was a typical cross-border bankruptcy case and more than 20 foreign financial institutions were important participants in the reorganization process. JunHe acted in accordance with the provisions of China's corporate bankruptcy law and referenced overseas cross-border bankruptcy legislation and model laws. The team paid close attention to the rights of the foreign creditors and the exercising of these rights, and this case is a useful example for domestic administrators when handling other cross-border bankruptcy cases.
JunHe lead partners for this project were XIAO, Wei, HUA, Xiaojun (Warren), WU, Lei, LIAN, Jing.
