The court, in an announcement on 31 July, said that a request by Mingde to extend the submission of its restructuring plan, after it lapsed on 25 June, was not successful. Subsequently, Mingde itself applied for bankruptcy.
Last December, compatriot shipbuilder Sainty Marine had applied to help restructure Mingde via a debt-for-equity rescue deal. But the rescue plan failed to make any progress as Sainty Marine is itself mired in financial troubles.
Sainty Marine, which is Mingde’s biggest creditor, eventually made a mutual agreement with Mingde to terminate the rescue plan.
Mingde held on to its last hopes as the company announced in mid-July that it sought new investors to turn the company around, setting a timeline of until 30 July to receive interests from investors.
Mingde, located in Jiangsu province, was listed as a ‘white list’ shipyard in China, meaning that it would have preferential access to loans by domestic banks as part of a government policy to consolidate the shipbuilding sector and help ease the liquidity crunch faced by the yards.
The ‘white list’ status, however, offers no protection against existing debts and it certainly also does not mean getting automatic access to funding.
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