Contents:
Business Sectors:
Complex commercial litigation and debt restructuring of non-performing assets
Transfer of debts
Debt recovery
Introduction:
Since its establishment, the Non-performing Assets (NPA) Department of Shanghai Yingdong Law Firm has been speeding into the whole NPA disposal market through the litigation financing segment, and provides clients with ultimate NPA disposal solutions by effectively integrating and optimizing the resources in three parts of the NPA disposal process -- assets, capital and disposal, and using legal means in combination with financial instruments.
Details:
Department Introduction:
Since its establishment, the Non-performing Assets (NPA) Department of Shanghai Yingdong Law Firm has been speeding into the whole NPA disposal market through the litigation financing segment, and provides clients with ultimate NPA disposal solutions by effectively integrating and optimizing the resources in three parts of the NPA disposal process -- assets, capital and disposal, and using legal means in combination with financial instruments.
Business Sectors:
Complex commercial litigation and debt restructuring of non-performing assets
The Department has worked with major financial institutions and asset management companies (AMC) for many times, and has joined the vendor list of many well-known banks and AMCs as their long-term partner to deal with a large amount of liquidation work for them. The Department provides, among others, high-end commercial litigation, arbitration, NPA due diligence, acquisition, disposal, restructuring and management, and asset package valuation and pricing services, helps clients find multiple breakthrough strategies in their cases, carries out due diligence and process control in the whole service process, helps clients evaluate the difficulty of disposal, assists clients to promote the legal process, including applying for change of executor after transfer of asset package, coordinating with the court to resume enforcement, acting as an agent for bankruptcy and liquidation, and pursuing criminal liability of a debtor for failure to satisfy an effective judgment, and represents creditors or debtors to negotiate with third parties and get control with its professional knowledge. With respect to the subsequent enforcement process, the Department is expert at responding to the objections to enforcement raised by third parties, and is acquainted with various methods of tracing the clues to the property of the person subject to enforcement, and has done a great job in subsequent debt recovery. In unsecured guarantee cases, the recovery rate is over 30%.
The Department has extensive access to first-hand information of creditors’ claims and is therefore able to actively organize all parties to negotiate together, facilitate the settlement without compromising the legitimate interests of its clients, and help clients recover debts quickly, and also able to refer all parties to each other, facilitate cooperation between its clients and third parties, quickly revitalize their assets, and help clients gain more and lose less.
Moreover, the lawyers of the Department have unique research and abundant practical experience in the field of high-end civil and commercial litigation, are proficient in real right law, guaranty law, corporate law, contract law, intellectual property law, economic law, procedural law, and some other laws and regulations, and expert at handling major and difficult cases in respect of corporate law, bankruptcy law, NPA, etc., have provided whole-process civil and commercial dispute resolution services for a number of large enterprises and financial institutions and eventually won the cases with over 3 billion RMB debts recovered. The Department has been widely praised by clients for its solid professional knowledge and rigorous and meticulous work.
Typical Cases:
Distressed property revitalization, major debt restructuring
Case abstract: The property in dispute covered an area of approx. 500,000 square meters and was developed in five phases, of which Phase 1 and 2 had been largely sold, Phase 3 had been partially delivered, Phase 4 was under construction, and Phase 5 was a clear land. Some problem with the property owner’s bank loan and trust loan caused debt defaults and eventually, the debts became NPA. The Department participated in a comprehensive due diligence of the project on behalf of the investor. Phase 3, 4 & 5 of the property in dispute had been seized, and the project company had hundreds of creditors with complicated debtor-creditor relationships.
Main debtor-creditor relationships: Claims on bank mortgage loans, claims on trust mortgage loans, claims on small loans, private loans, arrears owed to project contractors, arrears owed for handling the property ownership certificate, the owner’s funds in dispute, funds which were allegedly for house purchases but actually loans, etc.
Difficulties: The owner was involved in hundreds of lawsuits, with thousands of mortgages and seizure records, and the debtor-creditor relationships were extremely complicated; the creditors had different intentions during the transfer of claims, and the discounts for acquisition of some claims were difficult to negotiate; problems with overall construction of the project, scheduling and capital estimation; and there were some criminal risks in the pre-development by the property owner.
Highlights: The project team accepted the investor’s complete checking of the property owner’s debts, litigations, dishonest acts and other relevant information, and the Department basically verified the total amount of debts and the ratio of principal, interest, penalty interest and liquidated damages in connection with each creditor, and preliminarily determined the claim discount percentages. Moreover, the Department visited and coordinated with land, housing management and planning courts and other relevant authorities to verify the construction progress of the property in dispute, project compliance, mortgage, seizure and related right holders to provide a basis for capital investment and revenue estimation, and determine the means of divestment under extreme circumstances; collected the house purchase agreements and loan agreements related to the criminal offences involved in the pre-financing process of the property owner, and assessed the current status of creditors to give advice on criminal-related risks; assisted the investor with the whole investment process of the property in dispute, and cooperated with the investment manager of the property in dispute to acquire the two largest claims of financial institutions, respectively from New China Trust (approx. 700 million RMB claims, acquired at the price of 413.5 million RMB) and Bank of Communications (interest-free, acquired at the price of 65 million RMB).
Acquisition of 19 Distressed Debts Package
The total principal of the claims was 60.875 million RMB, and the collateral included residential, commercial and office buildings. All of the claims had been determined.
Services: Assisting the investors to conduct due diligence, estimation, risk control and disposal in connection with the debts package, and helping the investors find financing; it took only about 40 days to finally pay up and acquire the claims.
Highlights: 1. Through preliminary due diligence and evaluation, the Department helped the investors identify the claims in dispute and enter into an agreement on intent to acquire the claims in the shortest time. 2. Relying on professional and efficient legal service capability, the Department helped the investors estimate the investment value of the debts package in three aspects: claims, collateral and disposal; first, the Department verified the authenticity, completeness and legality of the claims; second, the Department thoroughly checked the ownership, order of mortgage, seizure, lease and occupancy, and dealings in the surrounding market of the collateral; last, the Department helped the investors design a reasonable deal structure to successfully divest by judicial means and by means of resale and repurchase. 3. The Department assisted the investors to find financing quickly and increase investment returns using leverage.
Settlement of subrogation claim of an insurance company
Claim: The principal was approx. 1.03 million RMB, and the principal and interest was totally approx. 1.6 million RMB. The collateral was a residential housing of 125 square meters in Jinshan, together with a small attic, which was valued at approx. 2 million RMB; the collateral was seized and mortgaged for the first time. The debtor failed to perform the mediation agreement, and enforcement proceedings were therefore initiated. The court rendered a ruling to terminate the proceedings.
In this case, the collateral was put up for auction by the original creditor twice for transfer, but not sold. The Department purchased the collateral at the price of the two failed auctions and then quickly initiated the procedure of changing the executor, resumed the case and successfully sold the collateral.
Enforcement for XXX International Trust Company against XXX Investment Limited, XXX Investment Holding Group Co., Ltd. and actual controller Jiang XX
Difficulties: In this case, the amount of enforcement was huge, and the assets of the persons subject to enforcement were numerous and all over the country; it was not easy even just to conduct due diligence on the assets. Moreover, the assets available for enforcement included the charges for many construction projects, which were subject to many complicated preferential claims; it was extremely difficult to figure out the order of repayment. Furthermore, the persons subject to enforcement had many civil disputes with the contractors in many construction projects, and there were many civil mediation agreements, certificates, statements and other documents with uncertain validity, which created lots of barriers in the enforcement and made it difficult to protect the legitimate rights and interests of the client. During the enforcement proceedings, a number of objections and lawsuits against the enforcement came up, and the enforcement was suspended for a period of time. If these objections and lawsuits were justified, the rate of repayment to the client after deduction of the preferential claims will be much lower.
Highlights: Facing the complicated interest relationships, the lawyer team of the Department made a two-step enforcement strategy. The first step was to get more assets available for enforcement, trying to dig out all assets in the name of the persons subject to enforcement; through meticulous investigations and persistent efforts, the lawyer team found out additional assets in the name of the persons subject to enforcement and immediately applied to the court for additional seizure, with which the client’s claim could be fully paid despite the existence of some preferential claims. The second step was to reduce the number of competitors; the lawyer team made an in-depth and thorough analysis, first on the preferential claims on the construction price, and quoted the Interpretation of the Supreme People’s Court on the Application of Law in the Trial of Construction Contract Disputes (I) and the relevant ruling of enforcement to submit a proposal to the enforcement court, and the proposed opinions and claims were supported by the court; next, the lawyer team analyzed and investigated each of the important documents provided by the persons subject to enforcement and third parties, including a number of Civil Mediation Agreements, Proofs for Construction Payments in Arrears, Statements, and Project Evaluation Reports, successfully eliminated a large amount of untrue, unlawful and irrelevant evidence, and procured that the client’s claim would be paid to the maximum extent. In the end, the team successfully recovered the assets available for enforcement and recovered a huge amount of loss for the client.
The civil and commercial litigation and arbitration cases handled by the Department mainly include:
Representing a trust and investment fund in a guarantee contract dispute with a listed company; in this case, the court ruled in favor of the client, and the listed company assumed all the guarantee liability of over 150 million RMB.
Representing the Bank of Ningbo Shanghai Branch in a trust loan contract dispute; in this case, all claims of the client were supported by the court.
Representing an international trust company in a trust loan dispute with a real estate company, with the subject matter totaling nearly 1 billion RMB; in this case, all claims of the client were supported by the court.
Representing XX Real Estate Company in a series of complex cases on contract disputes, entrustment contract disputes, deposit contract disputes, disputes over the liability for damage to the company’s interests, construction project contract disputes etc., with the subject matters totaling over 1 billion RMB.
Representing an asset management company and a financial company in a commercial arbitration case with an investment company, with the subject matter of over 120 million RMB.
The investment/joint venture/equity dispute cases handled by the Department mainly include:
Representing a private equity investment fund in an equity transfer contract dispute with an energy company, with the subject matter of nearly 200 million RMB; in this case, all claims of the client were supported by the court.
Representing a private equity fund partnership in a partnership dissolution dispute; after repeated negotiations and communications, the plaintiff finally withdrew the case, and the client did not need to dissolve its partnership.
Representing a real estate company in a shareholder qualification dispute, with the subject matter of 800 million RMB equity; in this case, the client’s rights and interests were successfully protected.
The bankruptcy and enforcement cases handled by the Department mainly include:
Representing an international trust company in an enforcement case against a real estate company, with the subject matter of enforcement totaling nearly 1 billion RMB; in this case, over 800 houses were seized for the client, and the client’s rights and interests were successfully protected.
Representing a trust company in the enforcement against a well-known businessman “Jiang XX” and his company; in this case, all the funds subject to enforcement totaling over 670 million RMB were obtained.
Representing a company in the enforcement against a person on a fortune list “Huo XX” and his company, with the subject matter of enforcement over 900 million RMB, and filing to the court for bankruptcy.
Representing a private fund in the enforcement against the energy tycoon “Wang XX” and his company, with the subject matter of enforcement totaling over 600 million RMB, and filing to the court for bankruptcy.
Representing a trust company to file a creditor’s claim of 200 million RMB.
Representing a well-known French enterprise to handle over a hundred of debts subject to enforcement, totaling nearly 20 million RMB.
Representing a NFA company to handle batches of distressed debts, totaling over 20 million RMB.
Representing a well-known real estate company and a shipping enterprise to file for bankruptcy liquidation, which was accepted by the court.
Furthermore, the lawyer team of the Department provides professional legal services for a number of famous enterprises and financial institutions, such as PDD, Hengfeng Bank Shanghai Branch, Bank of Ningbo Shanghai Branch, San Sheng Hong Ye Group, Zhongchang Marine Co., Ltd. and Zhongrong International Trust Co., Ltd., as their permanent legal advisors or special legal advisors, and has abundant practical experience in risk control and legal compliance review in corporate governance.