On 27 May 2017, Lantern Law Firm acted as the administrator of the reorganization case of Jeoby Electric Vehicle Co Ltd (including 2 subsidiaries), which was approved by the Kunshan People's Court in a ruling, achieving a key stage of success.

Seeking reorganization protection in a difficult situation

(hereinafter referred to as "Jeoby") Jeoby suffered a major fire accident in September 2013, followed by the loss of a major foreign customer, serious losses in domestic sales, the seizure and garnishment of bank accounts, the transfer of some of the company's assets and the flight of the company's de facto controller, and the insolvency of 400 million RMB in debt, involving More than 700 creditors and nearly 500 employees were also facing unemployment and had no choice but to apply to the court for bankruptcy reorganization.

Full takeover and improvement of business operations

After being appointed as the administrator, the firm quickly set up a team of more than ten lawyers, including Managing Director Wu Weihua and partner lawyer Chen Lei, to take over the bankruptcy enterprise. The administrators learnt that Jeoby had been in arrears of wages for several months and had long defaulted on payments for goods, making production unsustainable. In order to maintain the value of its assets, the administrators found a third party to advance the outstanding wages, applied for the release of accounts from seizure, resolved the financial difficulties and successfully resumed the company's operations.

At the same time, in order to prevent customers from diverting their orders due to concerns about the collapse of the company, the administrators visited customers one by one and explained the positive significance of the restructuring to Jeoby, eliminating customers' concerns and securing sufficient orders; in response to suppliers' creditors' refusal to supply after learning of Jeoby's bankruptcy, the administrators visited customers and negotiated with them to stabilize the production supply chain.

Consolidation and reorganization of subsidiaries

Based on the actual supervisory situation and the audit report, the administrator found that there was a high degree of legal personality and difficult to distinguish the assets between Jeoby and the two wholly-owned subsidiaries. In order to fairly settle the debts and liabilities and protect the legitimate interests of creditors, the administrator applied to the court for the reorganization of the two subsidiaries by merger.

Successful introduction of strategic investment

As a result, it was necessary to bring in a strategic investment. In order to recruit a wide range of investors, the administrator issued a recruitment notice through newspapers and the internet and, after several rounds of negotiations, decided to introduce COQ Asset Management Limited as an investor with the best terms.

Conclusion

The restructuring of Jeoby has revitalized idle assets, resettled hundreds of employees, maintained cooperation with more than 200 suppliers, and enabled nearly half of the small claims to be settled in full, with a short period of time and a high degree of security, while being the first enterprise to be successfully reorganized in bankruptcy by the Kunshan court, achieving good judicial and social results.

Through this case, the firm has actively explored bankruptcy restructuring and accumulated experience in handling cases, demonstrating good teamwork and the ability to overcome difficulties. In the future, the firm will continue to develop its bankruptcy practice and contribute to the judicial practice of bankruptcy in China.