Hylands Engaged by the Financial Institutional Creditors’ Committees to Complete the First Market-Oriented Debt-to-Equity Swap case

On October 24, 2018, the National Enterprise Bankruptcy Information Disclosure Platform showed that the Intermediate People’s Court of Luzhou City, Sichuan Province ruled to approve the reorganization plan of Sichuan Tianhua Co. Ltd. and Sichuan Tianhua Fubang Chemical Co. Ltd. and terminate the reorganization process. This marked the completion of the bankruptcy reorganization project of Lutianhua Group, which claimed to have a total debt of CNY 13 billion and was known as the first case of a market-oriented debt-to-equity swap. Through the market-oriented debt-to-equity swap, Lutianhua Group effectively eliminated financial risks. The asset-liability ratio of the enterprise reduced to 50% from 126% before the restructuring. The production and operation of the enterprise resumed a healthy and sound development path. From January to September this year, it achieved a net profit of CNY 470 million and turned losses into profits in an all-around way. In the meantime, for the first time, all financial creditors in this case, through the Financial Institutional Creditors’ Committees, conducted the consultation, negotiation, and implementation of a debt-to-equity swap with enterprises and relevant parties in a truly complete sense in a market-oriented mode, and achieved good results, providing a symbolic example for creditors of financial institutions to resolve financial risks by exploring a market-oriented way, and providing a wide range of reference for similar projects of market-oriented bank debt-for-equity swap throughout the country. The Financial Institutional Creditors’ Committees of Lutianhua Group engaged a professional legal team to provide legal service support for this project, which provided strong support for creditors of financial institutions to actively promote the progress of the project while fully protecting their rights and interests. The professional legal team of market-oriented debt-equity swap led by attorneys of Hylands Law Firm Yukai ZHANG, Liping QIN, Yuechao ZHANG, and Jiehua RUI provided quality services to the Financial Institutional Creditors’ Committees throughout the project and highly praised by clients.