Asia’s top banks face losses as China Huishan Dairy proposes provisional liquidation
Liabilities of the Chinese dairy firm and its units stood at 10.5 billion yuan in March
Embattled China Huishan Dairy Holdings has instructed lawyers to prepare for its provisional liquidation after finding more debt, leaving some of the top lenders in Asia vulnerable.
According to a filing to the Hong Kong stock exchange on Thursday, the net liabilities of the Liaoning-based firm’s China entities “could have been” 10.5 billion yuan (US$1.58 billion) as of March.
“The board has instructed the Cayman legal advisers of the company to prepare the relevant documentation to place the company into provisional liquidation,” said Huishan Dairy in the filing. “Such steps will take into account, as far as possible, options available to the company to preserve the assets of the group.”
A provisional liquidation filed by a company is usually to shield its assets from creditor claims while it tries to implement a restructuring. Huishan said in early November that a debt restructuring proposal had been passed by a majority of its onshore creditors.
Shen Meng, executive director with investment bank Chanson & Co, said that the more urgent issue here should be for those offshore creditors, who were in a weaker position compared to their mainland peers, to voice their requirements before the liquidation process begins, as the current environment was more beneficial for onshore creditors.