Dentons advises on Beijing Bankruptcy Court's first case

Attorney Yin Xiuchao represents the applicant to go through the relevant formalities

On February 15, 2019, Beijing Bankruptcy Court heard the first bankruptcy case since its establishment - Beijing Keeven Aviation Instrument's application for liquidation of China Aviation Airborne Equipment Corporation (CAAEC). A Dentons Beijing team represented Beijing Keeven on its application.

Founded in 1989, CAAEC is an enterprise owned by the whole people with a registered capital of RMB 14.66 million. Aviation Industry Corporation of China is its shareholder. According to investigation, the company ceased business in 2010 due to the capital chain rupture. Currently, it has no products with core technology and no production capabilities and competitiveness, and its business model lags far behind the market demands. According to preliminary figures, the company's external liabilities amounted to RMB 61.78 million, thus it was severely insolvent. Besides, it has been enforced by many courts to fulfill its obligations.

As a long outstanding creditor of CAAEC, Beijing Keeven applied to the Beijing Bankruptcy Court for liquidation of the company.

The Dentons team, led by senior partner Yin Xiuchao, supported by associates Hu Zhiping and Ma Tiantian, provided legal advices on the overall planning and implementation of the bankruptcy program.
The Beijing Bankruptcy Court was formally established on January 30, 2019. After receiving this application, a five-person collegial panel was set up. Ma Lina, vice-president of the Beijing No. 1 Intermediate People's Court, served as the chief judge for this case.

During the examination process, the panel comprehensively examined CAAEC's causes for bankruptcy, the background of this case, the status quo of the company, and the industry development, with a particular focus on the historic debt of the state-owned enterprise, especially its financial debt and risk chain. The panel further looked at livelihood issues such as employee resettlement, as well as the company's operational value, solvency and balances. On the basis of the above research, the panel found that the bankruptcy causes were valid and drawn up a corresponding speedy trial plan according to the financial status of the company.

With the deepening of supply-side structural reform, more and more "zombie enterprises" will be able to exit the market through the market-oriented and law-based bankruptcy procedures. In the future, Dentons Beijing will continue to serve the capital's economic development, assist in debt disposal work of "zombie enterprises", provide support in the supply-side structural reform in the capital, and help enterprises improve their core competitiveness and quality of development.