Home / NEWS & DEALS / Deals / details of junhe's deals

JunHe Advises on the Compulsory Liquidation of SMTCL’s Subsidiary


Zhishang Youxiang (Shanghai) Machine Tool Sales Co., Ltd. (“Zhishang Youxiang”) is a joint venture, and was formerly known as Unis Financial Leasing (Shanghai) Co., Ltd. It is a financial leasing business and its shareholders include Shenyang Machine Tool Co., Ltd. (“SMTCL”) and SYMG (Hong Kong) Company Limited (“SYMG HK”) which hold 51% and 49% of its shares, respectively. SMTCL, a state-controlled listed company, was reorganized through bankruptcy proceedings in 2019 and became a subsidiary of GENERTEC, a central state-owned enterprise.

According to SMTCL’s overall plan to exit the financial leasing industry, the company intended to divest from and liquidate its subsidiary Zhishang Youxiang. Although both shareholders of Zhishang Youxiang agreed to dissolve the company, SYMG HK (which had entered the winding-up process in Hong Kong and was represented by the liquidator) could not cooperate in the timely setup of a liquidation group, which conflicted with the urgency of the liquidation of Zhishang Youxiang. In July 2023, JunHe was formally engaged by SMTCL as its legal counsel for the matter. 

In order to realize the divestment as soon as possible, JunHe suggested applying for the compulsory liquidation of Zhishang Youxiang, as the divestment would be deemed to be completed once the court accepted the liquidation application and appointed a liquidation group. However, in practice, it is usually necessary to prove that a liquidation group cannot be formed after a relatively long time period (e.g., one year) following the cause of dissolution in order to prove the satisfaction of the condition of compulsory liquidation (i.e., failure to form a liquidation group on time). It was difficult to convince the court to accept Zhishang Youxiang’s compulsory liquidation application because the cause of the dissolution was so recent.

JunHe proved that the liquidation group could not be formed on time. It assisted SMTCL in coordinating with the liquidator through correspondence. The liquidator replied in writing, stating that it was unable to join the liquidation group to complete Zhishang Youxiang’s voluntary liquidation due to the special nature of the winding-up procedure in Hong Kong, the difficulty of cross-jurisdictional collaboration and the potential risk of liability for liquidation. In order to protect the creditors of SYMG HK, it could not agree with the setup of a liquidation group by SMTCL to complete the voluntary liquidation of Zhishang Youxiang. By submitting correspondence and other evidence to the court, both parties argued that they were unable to form a liquidation group in the short term and that it was not possible to do so in the foreseeable future. The court finally admitted the evidence, and the case became a precedent of “proven impossibility to carry out the liquidation on time although the cause of dissolution occurred recently”. In October 2023, thanks to the unremitting efforts of all parties, the court ruled to accept Zhishang Youxiang’s compulsory liquidation application.

JunHe took the initiative to explore, organize and collect admissible evidence to protect the client’s interests. JunHe assisted in facilitating the court’s acceptance of the compulsory liquidation application quickly, which shortened the case cycle and saved judicial costs, and also provided a valuable reference for central state-owned enterprises to handle similar cases. JunHe’s outstanding performance and contributions to this project were unanimously recognized by the parties.

The JunHe team was led by partner DONG, Ming who was also responsible for the specific work of the project. JunHe partners LIU, Zhengdong and CHEN, Yuwei and counsel WU, Ling also provided great support during the process.

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.
As the first carbon neutrality fund sponsored by a law firm in China, the BAF Carbon Neutrality Special Fund was jointly established by JunHe and the Beijing Afforestation Foundation (BAF) to promote carbon neutral initiatives, and encourage social collaboration based on the public fundraising platform to mobilize engagement in public welfare campaigns.