2024.07.12
On June 19, 2024, the People's Court of Yanggu County in Shandong Province ruled that the execution of the reorganization plan of Yanggu Xiangguang Copper Co., Ltd. and 18 other companies (the “19 Companies”) had been completed. The substantive consolidation and reorganization of the 19 Companies was successfully concluded. JunHe acted as the bankruptcy administrator in this case.
This project lasted for more than two years, from the 19 Companies’ entry into bankruptcy reorganization proceedings to the completion of the execution of the reorganization plan and the close of the bankruptcy proceedings. The case involved assets and liabilities of approximately RMB 20 billion and RMB 60 billion, respectively. The debtor-creditor relationship was complicated and various stakeholders were involved, leading to acute contradictions throughout the proceedings. There were many unprecedented difficulties, making it challenging for the administrator to carry out its work.
JunHe as the administrator played an active role in the execution of the reorganization plan. Adhering to the principles of “marketization and legalization” and respecting the autonomy of the creditors, we combined the government’s and court’s efforts to procure an agreement among the investors, the trustee and the creditors on the closing. It took nine months to execute the reorganization plan. We completed the separation of the acquired assets from the non-acquired assets within a very limited time frame, as well as the closing audit, assessment and asset inventory. We completed an adjustment of the post-money valuation, established a platform for the debt-for-equity swap as well as a trust disposal platform for the non-acquired assets, the delivery of equities and the delivery of repayment resources to the creditors.
The administrator solved many problems during the execution of the reorganization plan, including rapidly separating the domestic and overseas acquired assets from the non-acquired assets by combining judicial enforcement and transfers by agreement. We adjusted the amount of common claims to be settled during the execution of the reorganization plan through the claw-back of the shares of the trust beneficiary right. We also realized the exit of creditors who converted their claims into equities and undertook tax planning for the bankruptcy reorganization by establishing a multi-level debt-for-equity swap structure based on the trust plan and the shareholding platform. We resolved historical issues that arose during the closing settlement and the adjustment of the post-money valuation by combining the government’s and court’s efforts and communicated effectively with the creditors.
The successful reorganization of the 19 Companies eliminated many regional financial risks and softened debt risks. As a result, tens of thousands of jobs were maintained, the value of the 19 Companies’ core assets was guaranteed, and many industrial breakthroughs were achieved. The reorganization had vast economic and social effects, and its example of addressing debt risks can be used by many companies.
The administrator was highly recognized for its professional and efficient work by the creditors, municipal and county governments, courts and other relevant departments, and received eight letters of commendation and one banner from them.
This project was led and undertook by Ms. LIAN, Jing.
