A plan put forth by China Fishery’s creditors to take control of its assets in Peru has been approved by the judge overseeing the company’s Chapter 11 bankruptcy filing in the United States.
U.S. Bankruptcy Court Judge James Garrity approved the takeover plan of China Fishery subsidiary CFG Peru on 10 June. The final restructuring support agreement will convert USD 700 million (EUR 581.4 million) of existing debt into new equity and contribute USD 150 million (EUR 124.6 million) in new funding to the company. It will also pay USD 25 million (EUR 20.7 million) to the Ng family for the family’s full support of the agreement.
Crucially to the deal, the agreement also includes support from the Hong Kong and Shanghai Banking Corporation (HSBC), which agreed to waive USD 25 million (EUR 20.6 million) worth of claims it held under its club facility agreement with China Fishery in a negotiated settlement agreed to on 9 June. China Fishery had sued HSBC in 2018, demanding more than USD 22.6 million (EUR 19.5 million) in damages while alleging HSBC forced the company to make so-called “avoidable transfers” that directly contributed to its insolvency. A separate lawsuit suit filed by CFG Peru trustee William A. Brandt making similar allegations was also settled on 9 June.
In the settlement, HSBC agreed to waive expense claims of USD 11.5 million and club facility claims of USD 13.5 million (EUR 11.1 million). HSBC remains entitled to reimbursement of restructuring expenses created by the implementation of the creditor plan up to USD 5.5 million (EUR 4.5 million), and the bank preserves its rights to other claims related to its previous club facility loan to China Fishery. HSBC admitted no guilt or wrongdoing in the settlement.
The plan includes a USD 4 million (EUR 3.3 million) cash bonus to the company’s management team in Peru, to be paid out within the next six months, as well as a management incentive plan that includes the granting of common stock to employees. It also includes USD 31 million (EUR 25.6 million) to settle claims from holders of debt issued by Bank of America to CFG Peru.
“The provisions of the global settlement agreement constitute a good-faith compromise and settlement of all claims, causes of action, controversies, and other matters resolved pursuant to the global settlement agreement. The entry of the confirmation order shall constitute the bankruptcy court’s approval of the global settlement as well as a finding by the bankruptcy court that the global settlement is in the best interests of CFG Peru, CFG Peru’s estate, the other debtors, the other debtors’ respective estates, and holders of claims and interests and is fair, equitable, and reasonable,” Garrity wrote in his decision.
The plan still must be approved through the U.K. and Hong Kong court systems, which also hold jurisdiction over China Fishery.
Brandt's attempts to sell the CFG Peru assets by the court-imposed 1 June deadline were not successful and, as a result, he backed the creditors' takeover plan.
In an interview with SeafoodSource, Brandt predicted that in the next three to four years, the creditors will either operate company as a private entity or attempt an initial public offering.
Photo courtesy of Hatchapong Palurtchaivong/Shutterstock
