On 4 August 2017, advised by King & Wood Mallesons (“KWM”), the reorganization plan of Nantong Sinopacific Offshore & Engineering Co., Ltd. (“Sinopacific”) was approved by Jiangsu Qidong People’s Court. Sinopacific resumed full production to celebrate its rebirth.
Sinopacific has long been an international market leader in the small and medium-sized LNG/LPG carrier sector and also one of the first domestic players in the “shipbuilder white list”. With a dozen of national patents, Sinopacific enjoys prestigious reputation and top-tier global market share in manufacturing special vessels and revaporizer modules. Due to the downturn of marine market and huge external guarantee, Sinopacific suffered business difficulty and financial distress. Jiangsu Qidong People’s Court issued the ruling of Sinopacific bankruptcy liquidation on 5 August, 2016 and also designated a liquidation team as bankruptcy administrator led by Qidong municipal government officials. KWM is engaged to serve as the administrator’s legal counsel in charge of the bankruptcy proceeding for its remarkable track record and reputation in bankruptcy and restructuring.
From the very beginning, Sinopacific reorganization was under the spotlight, which was listed as one of the major national bankruptcy cases tracked by the Supreme Court’s National Enterprise Bankruptcy Reorganization website. KWM team creatively proposed a "liquidation to reorganization" strategy and directed the project into reorganization proceeding after claims review and assets appraisal, which turned out to be the key to survival of Sinopacific. To maintain the continuous operation, KWM team helped Sinopacific fulfill the existing orders according to the provisions in the Enterprise Bankruptcy Law on continuing business and executive contracts. Such efforts helped Sinopacific achieved “no suspension in bankruptcy” and finally improved compensation for creditors. Meanwhile, considering the recession of shipping industry, KWM team advised introduction of strategic investor for reorganization. After three public offerings, CIMC Enric Holdings (Shenzhen) Limited, subsidiary of a Hong Kong listed company CIMC Enric Holdings Limited signed up as a reorganization investor. The introduction of investor not only helps reorganization capital for Sinopacific, but also facilitates the future development of local economy. The reorganization plan drafted by KWM ensures full repayment of preferred credits, and further managed credit amount below RMB 300,000 repaid to all creditors by extra fund from the reorganization investor. Up to 93% of creditors voted for the draft reorganization plan.
In this case the amount of claim registered reached over RMB 9 billion, among which RMB 5 billion was eventually confirmed by the administrator. Besides the enormous claim amount, there were challenging legal issues and several claim classifications. With the expertise and experience, KWM team released the concern of employees and suppliers, introduced reorganization investor, ensured production uninterrupted and greatly improved compensation rate for creditors. KWM team’s efforts, in line with the best interests of all parties and serving as a solid foundation for reorganization, have been unanimously commended by Sinopacific, all creditors, the local government and court, as well as the reorganization investor. In this project, KWM team demonstrated its comprehensive outlook, team spirit and solution-orientated professionalism.
The Sinopacific Reorganization Project team was led by KWM Shenzhen office partners Wang Fuxiang, Gao Feng, Wu Jia and Hangzhou office partner Daryl Hao.
