DeHeng Advised on the Committee of Creditors
on Participating in the Restructuring of Dahua Group
2021-10-13
On July 18, 2018, the Dalian Intermediate People's Court ordered the restructuring of Dahua Group Co., Ltd. on the grounds that it was unable to pay off the due debts and there was obvious possibility of insolvency. Considering that Dahua Group, Dalian Ruilin Co., Ltd., Dalian Wancheng Real Estate Development Co., Ltd., Dalian Sanhui Thermoelectric Co., Ltd., Dahua Group Dalian International Trade Co., Ltd., Dalian Jinggu Fuel & Chemical Co., Ltd., Dalian Carbon Chemical Co., Ltd. of Dahua Group, Dahua Dissolved Acetylene Gas Plant of Dalian Economic and Technological Development Zone, and Dalian Dahua Longdao Petrochemical Co., Ltd. were highly mixed in corporate personality and financial affairs, on January 25, 2019, the above court ruled that these nine companies including Dahua Group were subject to substantive merger and restructuring. The restructuring plan was approved by the court in March 2019.
In August 2018, DeHeng won the bid and was engaged as the legal counsel for the Committee of Creditors of these nine companies including Dahua Group, to assist the Committee in participating in the restructuring of Dahua Group, handle legal affairs and safeguard the overall rights and interests of the Committee and its members.
After receiving the mandate from the Committee, DeHeng immediately formed a working team of lawyers with rich experience in insolvency, restructuring, banking and finance. The team did their job with diligence and efficiency, including issuing written legal opinions for the member units of the Committee on major legal issues in the restructuring procedure, assisting the Committee in drafting relevant legal documents, participating in the restructuring procedures of Dahua Group on behalf of the Committee, exercising the creditors’ rights according to law, negotiating and communicating with the administrator, other creditors, restructuring investors, Dalian Intermediate People's Court, etc., and assisting the Committee in supervising the job of the administrator in accordance with the law.
The restructuring case was of national influence and involved a large number of assets and liabilities and complicated legal relations. Regarding the criteria of substantive merger and restructuring, how to calculate the comprehensive compensation ratio of the creditors in the case of debt-for-equity swap, and how to deal with any conflict with the provisions of the restructuring plan during the implementation, and how to design the corporate governance structure after the joint-stock reform when the implementation period of the restructuring plan was forced to be extended due to various factors, and in the absence of clear provisions in the restructuring plan, DeHeng lawyers, with their professional expertise, provided a lot of professional opinions and suggestions to the Committee, assisted it in solving a lot of complicated and difficult legal issues, helped the Committee and its member units coordinate actions, safeguarded their lawful rights and interests, and played an important role in the final success of the restructuring. The professionalism of DeHeng lawyers was widely recognized and highly appraised by the Committee and its member units as well as Dalian Intermediate People's Court.
The DeHeng team was led by partner Zhou Jie, member of DeHeng Bankruptcy & Restructuring Committee, and partner Huang Zhuoying, member of DeHeng Capital Markets Committee, with primary support from lawyers Ren Zhangwei and Zhang Biqiang.
Founded in 1933, Dahua Group is the largest and first production base of basic chemical raw materials and chemical fertilizers in China and one of the top 100 petrochemical enterprises in the country.
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