Nantong Mingde Heavy Industry (NMHI), a subsidiary of the financially troubled shipbuilder Jiangsu Sainty Marine Corporation, has missed the June 26 deadline to submit its restructuring plan to the Nantong People’s court.
In other words, Sainty Marine has aborted its plan to help the restructuring of debt-ridden compatriot Nantong Mingde Heavy Industry.
The court accepted Nantong’s application for the bankruptcy reorganization on December 26, 2014. NMHI has entered into court receivership since Sainty Marine applied for the bankruptcy restructuring.
China’s bankruptcy law stipulates that administrators or debtors must submit a draft reorganization plan within six months of the court’s acceptance of the restructuring plan.
Shenzhen-listed Sainty Marine, which is troubled by debts and lawsuits, confirmed on Thursday that it has decided to pull out from the planned debt-for-equity rescue deal for Mingde. Mingde has repeatedly failed to submit its restructuring plan. Hence the future of the company is uncertain.
“The management of Mingde believed that in view of Sainty Marine’s cashflow problems, it is unable to channel any more resources to support the restructuring process,” Sainty Marine said in a statement to the stock exchange.
“In view of Mingde’s rather large-scale of operations and after a discussion with Mingde’s management, Sainty Marine has decided to stop its involvement in the restructuring of Mingde,” the statement said.
Sainty Marine had earlier warned that it is facing the risk of not being able to fulfill some of the 32 newbuild contracts it has being built at Mingde Heavy Industry due to the ongoing restructuring of the yard, and it might face up to $473mln in losses if the restructuring fails.