UPDATE 1: 2:07 a.m. ET 2/1/2021
: During a hearing today, Feb. 1, attended by Reorg, the Hong Kong high court granted a winding up order against Founder Information, a guarantor of Peking University Founder Group’s defaulted $300 million 4.575% 2020 bond issued by Kunzhi Limited, and appointed Deloitte as liquidator. Continue reading for our Asia Core Credit team's update on Founder Information and request a trial for access to our analysis and reporting on other onshore default situations.
, Derek Lai, Edmund Yeung, Glen Ho and Ryan Jarvis of Deloitte were appointed as joint provisional liquidators.
After the hearing resumed shortly after noon, Judge Harris rejected a request to adjourn the hearing for 14 days from the company’s counsel, Michael Ng of Clifford Chance.
When handling down the judgement, Judge Harris agreed with the company’s counsel that Peking University Founder Group involves state interest, and that the process of selecting its strategic investors has to be kept confidential. However, the judge said he believes that the company should have presented evidence earlier to the court that they are looking for other restructuring options as the proceedings commenced last year.
The judge also noted that while no creditors have filed support to the adjournment, the petitioner represented 54% of the Founder Information’s total debt, which makes it a “sophisticated” creditor.
The court agreed with the petitioner that there is “an urgent need” to protect Founder Information’s “single, most valuable” asset, its onshore parent entity, Peking University Founder Group, which is valued at RMB 5.25 billion ($812.7 million) as there is a risk of dissipation when the onshore restructuring proposal is presented by April 30. The Judge also noted that the company has not explained how the petitioner’s claims will be protected if the company were to be restructured.
Original Story 10:55 p.m. UTC on Jan. 31, 2021
Hong Kong Court Adjourns Hearing Until Midday Today, Feb. 1, for Winding Up Petition Against Founder Information
The Hong Kong High Court has adjourned a hearing until midday today, Feb. 1, of a winding up petition against Founder Information, a guarantor of certain bonds issued by Peking University Founder Group, after the company applied for an adjournment during the hearing, which Reorg attended.
During the hearing, the company’s counsel requested seven more days to file further evidence on a recent strategic investor selection and requested the court to adjourn the hearing for 14 days.
Judge Harris heard from the company that the bankruptcy administrator of PKU Founder selected on Friday, Jan. 29 a consortium consisting of Zhuhai Huafa, Ping An Insurance and Shenzhen Tefa Group as strategic investors for its mainland restructuring proceedings.
Founder Information’s counsel told the Judge that the consortium will “inject further investment into the group,” and that restructuring is “likely to yield better interest to creditors and the petitioner.”
However, the petitioner argued that Founder Information would need more time to come up with the restructuring plan as strategic investors were only recently selected, and the company’s request for adjournment to give further evidence would only be “a series of hopeful statements” than an actual plan.