2024.10.29
On October 24, 2024, the reorganization plan of Shanghai Dongying Real Estate Co., Ltd. ("Dongying") was approved by the People's Court of Pudong New Area of Shanghai Municipality. JunHe’s Shanghai office ("JunHe") acted as the reorganization administrator and assisted Dongying in achieving an important milestone in the work of ensuring timely deliveries of presold homes. The JunHe team was led by partner LIU, Zhengdong.
Dongying is a real estate development company primarily engaged in the development of the real estate project "Yipin Yayuan" ("Dongying Huayuan" or "Binjiang Yipinyuan" for promotional purposes) located at No. 188 Puyi Road, Pudong New Area, Shanghai. During the construction of the project, Dongying obtained the pre-sale permit for Yipin Yayuan and sold 285 residential units. Then due to insufficient funds, the construction slowed down and even stopped twice, resulting in a failure to deliver the presold homes on time. As this project concerned the basic housing needs of numerous homebuyers, the People's Government of Pudong New Area of Shanghai Municipality included this project in its list of projects for which "timely deliveries of presold homes should be ensured” and set up a special task force to promote the work.
On February 28, 2024, the People's Court of Pudong New Area of Shanghai Municipality ruled to hear the case of Dongying’s bankruptcy reorganization and appointed JunHe as the reorganization administrator. JunHe adopted a two-pronged approach to promote the continued construction of the project and Dongying’s reorganization simultaneously. Within 40 days from entering the reorganization proceedings, the debtor received a loan of RMB 130 million in the form of a debt for the common benefit. The proceeds of the loan were used for the continued construction and as a result, the project resumed construction as soon as possible. Meanwhile, the administrator publicly selected reorganization investors, promoted the negotiation and conclusion of the reorganization investment agreement, and drafted the reorganization plan. The draft reorganization plan was approved by an overwhelming majority in each voting group of investors and creditors. On October 24, 2024, the People's Court of Pudong New Area of Shanghai Municipality ruled to approve the reorganization plan of Dongying and terminate the reorganization proceedings.
According to the audit and valuation conducted as entrusted by the administrator, Dongying had total assets of approximately RMB 4 billion and total liabilities of approximately RMB 10 billion. Its main assets were construction-in-progress, and its debts included financial liabilities, construction project debts, operating liabilities, and claims asserted by homebuyers due to its inability to deliver homes on time. The various claims required the administrator to distinguish and handle them differentially.
With the strong support of the special task force, JunHe, as the administrator, adhered to the market- and law-oriented principles in the reorganization proceedings and addressed the reorganization challenges through multiple channels and means. This included fully utilizing the government-court coordination mechanism and actively communicating with governmental departments to ensure the safety and stability of the continued construction and comfort the homebuyers; introducing common-benefit debt investors to provide funds for the continued construction, thereby maximizing the value of the bankruptcy estate; fully negotiating with mortgagees to release part of the continued construction value of the collaterals, thus offering higher repayment possibilities for relevant creditors; holding regular communication meetings with homebuyers to update them on the progress of the continued construction, thus alleviating their concerns and misunderstandings and gaining their understanding and recognition of the administrator's work.
JunHe was highly recognized by the court, the creditors and other stakeholders in this case. We will actively promote the effective implementation of the reorganization plan and keep the schedule of continued construction, the project quality and safety under control, so as to deliver the presold homes to their buyers for use by March 31, 2025.
Partner LIU, Zhengdong led the JunHe team, and partner LI, Chenghao and counsel LIU, Xin were responsible for the specific work of the project. Partner DONG, Ming, counsel WU, Ling and partner CHENG, Hong (Julie) also provided great support for the project.
