China Merchants takes over Dandong Port in controversial court ruling

China Merchants takes over Dandong Port in controversial court ruling

China Merchants Group’s Liaoning Port Group has taken over bankrupt Dandong Port as a local court forced the approval of a restructuring plan proposed by the government-led administrators.

Dandong Port entered into court-led restructuring process in April last year due to a major debt crisis with liabilities amounting to RMB66.7bn ($9.67bn), with an administration team formed by multiple government departments.

Under the restructuring plan, Liaoning Port Group will take control of Dandong Port and institutional creditors will receive shares of the port worth around 11.7% of their debt amount, while personal creditors will receive 10% debt repayment in cash.

The court forced the ruling despite the creditors and shareholders voting against the restructuring plan in two rounds of voting.

Harold Ruvoldt, a lawyer who claims that he represents 80% of the company’s shareholders, wrote an open letter claiming that shareholders were completely shut out of the bankruptcy and reorganisation process.

The port was controlled by local multi-sector enterprise Rilin Group and businessman Wang Wenliang, founder of Rilin Group, and it was one of the few private-owned seaports in China. Wang resigned as Dandong Port’s legal representative in 2017 after he was found to be involved in a party official election scandal. He has been missing since, and sources tell Splash that Wang has already fled overseas. Prior to the court ruling, Wang and his family controlled a 53.3% stake in the port via two offshore entities.

When contacted by Splash, an official from an investment firm which suffered losses from Dandong Port’s bond default, said the court didn’t consult with the creditors before making the ruling.

Dandong Port, situated on the border between China and North Korea, is major bulk and container port in northeast China, serving as an important gateway port to the Far East.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.

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