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Enterprise's Consolidated Restructuring Successfully Debuting in Huizhou
Issue date：08 Sep 2017
On 24 August 2017, at the forth creditors meeting of Huizhou Chuangcheng Development Co., Ltd., Huizhou Xinghua Industrial Co., Ltd., Huizhou Andun Prevention Technology Co., Ltd. and Huizhou Bailitong Real Estate Co., Ltd. (“the four companies”), creditors were grouped to vote on the draft of restructuring plan with each group passing the plan by a wide margin. On 24 August 2017, the restructuring plan of the four companies was approved by Guangdong Huizhou Intermediate People’s Court. JunZeJun Law Offices is engaged to serve as the legal counsel of the four companies’ administrator in charge of the restructuring proceeding. Wang Cuiping, a partner of JunZeJun, was appointed as the responsible persons of administrators of Chuangcheng and Bailitong by the court.
Due to the fact that the application of restructuring was accepted by the court when the four companies was unable to repay its enormous debts and ridden by a flood of litigation, the restructuring case of the four companies attracted intensive attention from the judiciary and local government, which ensure the restructuring procedure carried out rightfully and protecting the interests of different parties effectively. The restructuring case of the four companies is not only the first restructuring case, but the first restructuring case applied substantive consolidation in Huizhou. The approval of the restructuring plan of the four companies represents a major success in the restructuring work, which lasted more than one year, and the enterprise's consolidated restructuring system successfully debuting in Huizhou.
Four companies own many projects under construction including Xunliao Bay Happiness Garden, Xiangshan Villa, Second Stage Group two of Bailitong Plaza and Third Stage of Bailitong Plaza, which are forced to delay due to the capital chain broken. In the restructuring case of the four companies, complicated right’s structure with serious conflicts involves unpaid taxes, employee claims, claims that are secured by property, priority of claims for construction project price and ordinary debts such as private loans. In the restructuring process, nearly 300 creditors to declare the creditor's rights to the administrator. In addition, 107 employees and nearly 100 property buyers are involved in this case. The huge scale of the four companies’ debts is respectively over 10 billion yuan and over 4 billion 800 million yuan before and after the four companies decided to consolidate by the court. In contrast, effective assets of the four companies under the condition of consolidated restructuring are valued at about 2 billion 500 million yuan, almost all of which were mortgaged or pledged. The restructuring case provides a successful model for the rebirth of distressed real estate developers who bear excessive debts or a broken capital chain and helps the judiciary to obtain valuable experience for managing the consolidated restructuring cases. With solid professional skills and extensive experience, JunZeIun provides comprehensive legal support for the administrator under the guidance of the court. After the implementation of the restructuring plan, the four companies will successfully get rid of the debt crisis and celebrate its rebirth.
This project team was led by partners Chen Zetong and Wang Cuiping and supported by many other partners, associates, and trainee associates including Luo Siwei, Zhao Qian and Xu Jingyu.