2024.05.20
Dongying Intermediate People's Court (“Dongying Intermediate Court”) recently confirmed that the implementation of Dongying Fangyuan Non-ferrous Metals and 20 other companies (“Fangyuan”) reorganization plans had been completed. The announcement marked the successful conclusion of the reorganization of Fangyuan in which JunHe acted as the bankruptcy administrator.
On 26 January 2022, Dongying Intermediate Court ruled that it had accepted the creditors' application for the reorganization of Fangyuan and appointed JunHe as the bankruptcy administrator by way of competitive selection. On 26 August 2022, the draft reorganization plan was submitted for voting at the creditors' meeting. On 16 December 2022, Dongying Intermediate Court approved the reorganization plan of Fangyuan, and the company entered the implementation period of the reorganization plan. During the implementation period, JunHe, under the supervision and guidance of the court and with the support of the creditors, proceeded with the work lawfully, efficiently and smoothly. They completed various works such as the building of the main copper business platform and the non-copper platform, established the asset disposal platform, allocated the debt repayment funds, and executed the debt retention documents.
JunHe completed the closing-related works and helped the reorganized enterprise undertake rapid development. After the reorganization plan was approved and took effect, the administrator overcame the impact of the epidemic, assessed the situation and initiated the closing-related work at an appropriate time. On the basis of the asset inventory and the closing audit and by establishing a transitional operation and management authorization mechanism, the transfer of the business management rights to the investors after the reorganization was achieved. The completion of the asset delivery and the equity delivery provided important support for the rapid transformation and improvement of the reorganized enterprise. Fangyuan achieved a historic breakthrough in its first year of business after the reorganization. The economic and social effects of the reorganization were remarkable.
JunHe resolved the foreign exchange issues related to the repayment and debt-to-equity swap for foreign financial creditors. This was a typical cross-border insolvency case involving more than 20 creditors of overseas financial institutions from 16 different countries and regions. JunHe, in conjunction with the relevant departments and entities, developed a variety of options for the cross-border payment of debt-servicing funds and coordinated with the different parties to implement the cross-border payment of funds. They ultimately accomplished the difficult repayment to overseas creditors with the support of the relevant parties, effectively protecting the lawful rights and interests of both the domestic and overseas creditors.
JunHe completed the debt-to-equity swap in an innovative manner. The large size and complexity of the claims, and the delay in determining the amount of certain claims as a result of four derivative lawsuits on bankruptcy claims, made the implementation of the debt-to-equity swap difficult. There was also a difference between the base date of the reorganization audit and assessment and the base date of closing, and the continuing operation of the enterprise during the reorganization period resulted in changes in the form and value of the assets, and the value of the underlying assets of the debt-to-equity swap changed as a result of this. JunHe overcame uncertainties by adopting innovative measures such as a pre-determined valuation adjustment mechanism, a closing audit, the establishment of a multi-level debt-to-equity swap platform, a "pool of equity" and a clawback mechanism, and successfully completed the debt-to-equity swap in a relatively short period of time.
JunHe communicated with and coordinated the domestic and foreign creditors throughout the implementation period and the entire process of the reorganization. They maintained communications and consulted with the Creditors' Committee on significant matters such as the selection of the service institutions, the transitional management plan, the delivery of the assets, the establishment of an asset disposal platform, the implementation of the debt-to-equity swap, and the supervision of the use of the debt-servicing funds. The reorganization-related work was highly recognized by both the domestic and foreign creditors.
The lead partners for the implementation of Fangyuan's reorganization plan were YANG, Li and BAI, Tao_Theo.
