Uh-oh, GITIC officially reneges -- this won't go over well...
Monday, January 11, 1999
Major Chinese investment firm declared bankrupt
Hong Kong: Guangdong International Trust and Investment Corp (GITIC) has been declared bankrupt with debts totalling 36.17 billion yuan ($6.98 billion) in one of China's biggest corporate collapses, reports here said today.
The bankruptcy decision, the first in communist China since 1949, was announced at a meeting with 200 local and international creditors in southern Guangzhou yesterday, the South China Morning Post and the Hong Kong Standard reported.
It provided for payment to some 20,000 individual Chinese creditors but left foreign creditors in the lurch failing to give international creditors any assurances they would be repaid, even if their exposure to GITIC was registered with the Government.
GITIC, which is the investment arm of the Guangdong provincial government, has assets of 21.47 billion yuan against debts of 36.17 billion yuan, according to a central bank appointed liquidation committee.
The company owed $US1.4 billion ($A2.22 billion) to banks in Hong Kong alone, the Hong Kong Standard reported.
Mr Wu Jiesi, who heads the liquidation and trustee committee, said foreign creditors would not necessarily receive priority in repayment.
Mr Chen Yingming, a legal expert on foreign financial institutions, said the measures were in line with China's bankruptcy law and the regulation of the State Administration of Foreign Exchange (SAFE).
"Those foreign debts which were not registered with SAFE will not be protected by the law," Mr Chen was quoted as saying. He added foreign banks had virtually no chance of repayment.
The central People's Bank of China ordered GITIC's closure three months ago after it failed to meet its loan obligations. - Agence France-Presse |
