Sainty Marine Corporation Ltd. (Sainty Marine)’s bankruptcy reorganisation on which King & Wood Mallesons (KWM) counselled was named a Top 10 Civil/Administrative Suit of 2016 by the People's Court Daily. It is not only the first case where the Supreme People's Court and the China Securities Regulatory Commission (CSRC) consulted with each other, but also the first case where reorganisation of a publicly-listed company and restructuring of its major assets were simultaneously conducted. The lawsuit is significant in that it serves as a guide to similar cases and has a great impact on the market and on society at large. Each year, the People's Court Daily will select 10 major lawsuits handled by people’s courts at all levels over the past year that had impacts on society, were complex or yielded groundbreaking or guiding awards.

Sainty Marine is a state-owned listed holding company engaged in both shipping and non-shipping trade. Hit by the continued downturn of the shipping market, Sainty Marine had undergone a business and debt crisis since 2014, which deteriorated to the point of insolvency and exposed the company to the risk of delisting. On 5 February 2016, the Nanjing Intermediate People’s Court ruled that the company enter into bankruptcy and reorganization and appointed KWM as administrator through public selection.

The reorganisation plan drafted by KWM was approved by the court on 24 October 2016. In face of the approximately RMB 9 billion of debt and complex legal relations, KWM drew on its resources and experience to cut through the complexities, paving the way for its reorganization. Accordong to the reorganisation plan, Sainty Marine’s capital reserve was converted into about 520 million shares, which were not distributed to the existing shareholders, but allocated to all the creditors to meet the company’s debt obligations. Based on profit forecasts for a listed company after asset injections, the creditors could receive full repayments by disposal of their shares, the highest proportion of debt repayment in a bankruptcy reorganisation case in recent years. Moreover, the company reorganisation was synchronized with major asset reorganisation, providing an important reference for future cases. The trailblazing practice also sets an example of how to coordinate administrative and judicial powers.

The project was led by partners Liu Yanling, Wang Le, Xie Yuanxun, Li Ping and Daryl Hao. It was the second time that a bankruptcy reorganization suit on which KWM advised was selected as a Top 10 Civil/Administrative Suit following the Nanjing Tanker Corporation reorganization case in 2014.

Liu Yanling commented, “As its administrator, we’re proud that the Sainty Marine bankruptcy reorganization case was named a Top 10 Civil/Administrative Suit of 2016. With over a decade of experience in restructuring and insolvency as well as major assets reorganization of listed companies and innovative teamwork, we made an executable plan to best protect the rights and interests of all parties. The outcome of the reorganization not only is critical to the client, but also eliminates potential threats to social stability. That’s where we feel we have a grave responsibility.”