China’s Chaori Solar, which made headlines around the world in March when it became the first domestic Chinese company to be set adrift by the government to default on a debt, will this week be presented with a restructuring plan by its administrators.
Accountants KPMG Huazhen, acting alongside law firm King & Wood Mallesons as Chaori Solars administrators, have revealed that structural challenges caused by the company’s overseas assets have complicated ownership structures, reports Bloomberg news.
Chaoris debtholders have been issued with a document stressing the difficulties of the companys reorganization that also outlines that a party will be picked to lead the restructuring process. The company is expected to confirm more details tomorrow.
Chaori Solar became the first Chinese company to default in China’s onshore bond market, and investors are watching developments closely to see how China will balance the companys future against calls to liberalize its financial industry. Last year, Standard & Poors estimated that corporate debts in China topped $14.2 trillion – Chinas infamous state-backed safety net shielding many unprofitable companies from bankruptcy.
However, Chaori Solar was set adrift in March when it could only pay approximately $650,000 of a $14.6 million interest payment. The company’s subsequent default was followed by a court acceptance in June of an application for bankruptcy.
This week, debtholders have approved the administrators’ plan to manage and dispose of Choari’s assets as the company seeks to restructure debts of around 4.4 billion yuan. Administrators hope to sell a number of Choari-owned utility-scale solar PV plants in Greece, Italy and Bulgaria to fund the restructuring. At the company’s Shanghai HQ, production was halted in April but resumed last month on the advice of the administrators.