On December 25, 2023, the reorganization plan of Guangdong Rongtai Industry Co., Ltd. (stock short name: *st榕泰, stock code: 600589, hereinafter referred to as “Guangdong Rongtai”) was approved by the Intermediate People’s Court of Jieyang City of Guangdong Province (the “Jieyang Intermediate Court”). On December 29, 2023, the Jieyang Intermediate Court ruled that the implementation of the reorganization plan had been completed and the reorganization proceedings were closed. JunHe was one of the joint administrators, and JunHe partner Yang Li acted as the head of the administrators.
Guangdong Rongtai is engaged in the business of Internet Data Centers. The company recorded negative audited ending net assets in 2022 and was given a delisting risk warning. If the audited net assets attributable to the shareholders of the listed company remained negative in 2023, the company’s stocks would be subject to delisting. On September 6, 2023, the Jieyang Intermediate Court decided to start a prepackaged reorganization of Guangdong Rongtai. The administrators reviewed and verified the claims, undertook an asset investigation, recruited reorganization investors and formulated a reorganization plan during the prepackaged reorganization period, which advanced the efficient implementation of the reorganization proceedings. On November 24, 2023, the Jieyang Intermediate Court ruled that Guangdong Rongtai had entered into reorganization proceedings. On December 25, 2023, the first meeting of creditors was convened, at which the draft reorganization plan was approved. On the basis of the prepackaged reorganization, the implementation of the reorganization plan was completed on December 29, 2023. Guangdong Rongtai’s reorganization plan was overwhelmingly passed by the investors and creditors. The percentage of affirmative votes in the group of investors was 99.8122%; 97.35% of the ordinary creditors attending the meeting agreed with the plan, whose claims accounted for 92.23% of the total amount of claims of the group of ordinary creditors; and the percentage of affirmative votes in the group of employee claims, the group of tax claims, the group of social security claims and the group of secured claims were all 100%.
Guangdong Rongtai is a listed company with significant influence in Jieyang. Its successful reorganization not only eliminated the delisting risk, but has great significance for judicial practice. It was the first case of a transition from prepackaged reorganization to the reorganization of a listed company in Jieyang and it has enriched the judicial practice of the prepackaged reorganization system. A large proportion of the debts were repaid in cash (i.e. for each ordinary claim, the part below RMB 1 million was discharged in full, and 38% of the part above RMB 1 million was discharged in cash), which protected the interests of creditors in accordance with the law. Furthermore, a settlement was reached with 160 employees during the reorganization process, and the longstanding employment problem was completely solved.
Upon completion of the implementation of the reorganization plan, the financial condition of Guangdong Rongtai will be improved and its ability to continue as a going concern will be fundamentally enhanced. While protecting the legitimate rights and interests of creditors to the greatest extent, the successful reorganization of Guangdong Rongtai will increase the real value of the stocks held by all of its shareholders. Guangdong Rongtai will focus on its primary business of data centers and develop its computing power business according to a national strategy of channeling computing resources from the east to the west, so as to provide an important base for the development of the AI industry.
The JunHe team was led by partners YANG, Li, SHEN, Feng and BAI, Tao_Theo. Mr. YANG, Li acted as the head of the administrators, and Mr. BAI, Tao_Theo was responsible for the specific work.
