[Case No.] (2025) Hu 03 Pu 246
[Case Summary]
Founded in 1995, the Property Company (hereinafter, the Company) was one of Shanghai's earliest private enterprises engaged in real estate development. Over the years, it launched several branded projects across the city and established a notable market presence. Unfortunately, its financial health deteriorated in recent years due to related-party guarantees and unfavorable industry conditions. The Company began to face overdue bank loans, mounting litigation enforcement cases, and was pushed to the brink of bankruptcy. By 2024, its total debt had nearly reached CNY 4 billion. Despite these obstacles, the Company's shopping malls and serviced apartments, situated in prime locations and operating successfully, continued to show strong business prospects and significant restructuring value. In September 2024, seeking relief, the Company applied for out-of-court restructuring with the North Bund Enterprise Out-of-Court Restructuring Center (hereinafter, the North Bund Restructuring Center). Upon acceptance of the application and upon recommendation by the North Bund Restructuring Centre, the Company appointed a law firm as its corporate restructuring administrator. The administrator conducted a thorough review of the Company's assets and liabilities, established rules for creditor deliberation, and led several rounds of negotiations between the Company and its major creditors. As a result, the administrator gained critical understanding and support for the restructuring plan. Drawing on the Investor Database of the North Bund Restructuring Center, the restructuring administrator promptly contacted an asset management company in Zhejiang province and collaborated with it to develop a restructuring plan for the Company. Throughout the process, the Company maintained the stability of its core management and ensured the continued operation of its main business entities. Ultimately, it attracted a strategic investor with an intended investment of CNY 530 million and signed a Restructuring Agreement with creditors representing more than two-thirds of total claims.
In January 2025, the North Bund Restructuring Center supported the Company in seeking pre-reorganization proceedings before the Shanghai No. 3 Intermediate People's Court (hereinafter, the Court). The Center released a "Restructuring Status Statement" and recommended retaining the original restructuring administrator as the provisional administrator. Once the Court accepted the pre-reorganization application, it directed the provisional administrator to build on the achievements of the hybrid workout. Pursuant to the Restructuring Agreement, a draft reorganization plan was prepared and received overwhelming approval at the creditors' meeting. Subsequently, the case transitioned into formal reorganization proceedings on March 25, 2025, and the temporary administrator was officially appointed. After a voting process, the creditors' meeting formally endorsed the draft plan. On May 7, the Court approved the reorganization plan and concluded the proceedings.
[Significance]
This case involves a hybrid workout, in which the restructuring plan was primarily negotiated and agreed upon by the debtor and creditors, with the court playing a supporting role. Not only does it demonstrate the unique advantages of market-oriented, hybrid workout mechanisms, but it also establishes a replicable model for enhancing the business environment. For instance, these mechanisms provide timely relief for distressed companies. The Company chose a law firm independently from the North Bund Restructuring Center's pool to act as its restructuring administrator. At the same time, it engaged audit and valuation firms to assess its assets and liabilities thoroughly. The Company quickly identified and secured investors from the Center's database, and matched its restructuring needs with the right partners. This approach laid a strong foundation for achieving high-quality hybrid workouts within a short time frame.
Furthermore, the successful outcomes of the out-of-court phase were fully integrated into the judicial reorganization process, thereby ensuring a high success rate. The case serves as an example of efficient coordination between procedures, as key outcomes from the out-of-court process—including investor introductions, creditor claims management, and the design of a restructuring plan—were carried forward into the formal reorganization stages. Consequently, this smooth transition greatly enhanced the efficiency of corporate rescue efforts.
