Debt Restructuring -- Second Life for a Distressed Company
Stellar Megaunion Corporation ("SMC") was in serious debt, as it could barely repay its liabilities. New World China Land ("NWCL"), which was seeking an opportunity to go public, proposed to acquire SMC as a shell company which has no assets, but is publicly listed. To achieve this goal, NWCL conducted several rounds of negotiations with SMC's creditors to settle SMC's debts and clear the roadblocks for the acquisition. However, the parties were unable to make much progress in the negotiations due to the large number of SMC's creditors involved. As SMC needed to solve its debt crisis as soon as possible and its negotiations with NWCL were deadlocked, the company decided to reorganize to completely release itself from the heavy debt burdens in a short period time.
SMC's Reorganization
A. Reorganization initiated by SMC's creditors
As SMC failed to repay it debts due, a third party creditor petitioned the proper Intermediate People's Court (the "Court") to reorganize SMC. The Court accepted the petition on March 11, 2008 ([2008] Yusanzhongbozi No.1).
B. Confirmation of Creditors' Rights
According to the proposed reorganization plan the administrator of SMC (the "Administrator") submitted to the Court and the first SMC creditors' meeting, 70 creditors filed claims and the total value of confirmed claims was nearly RMB 2.5 billion. [continue reading to find out the outcome]
Liu Yanling, Partner and head of King & Wood's Restructuring & Insolvency group.
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Wine Confusion: Trademark Dispute over Cabernet
On May 26, 2008, the China Trademark Review and Adjudication Board (“TRAB”) of the State Administration for Industry and Commerce (SAIC) made a decision in favor of Changyu Winery Group, upholding its exclusive use of the mark “cabernet” in Chinese （“解百纳”） as a registered trademark. The decision further found that Changyu established “解百纳” as one of its trademarks through its use and did not consider “解百纳” the generic name for these cabernet grape varieties. This means other wineries such as China Great Wall Winery, Dynasty Fine Wines Group Limited and Yantai Weilong Grape Wine Co. are prohibited from using the mark “解百纳", which may certainly cause damage to these wine makers in marketing their products.
This dispute mainly focuses on the following two issues:
1. Whether “解百纳” directly indicates the main raw materials and the characteristics of the products and accordingly should be considered a generic term for certain wine products;
2. Whether Changyu obtained the characters “解百纳” through its long term use.
Ting Xu, Associate, Trademark Department
Continue Reading...Privacy: New Developments in the Protection of Personal Information
Finally, it seems that the first light of dawn in a quieter world has been shown to people who have been continuously bombarded by anonymous messages or phone calls via mobile and other communication channels for private tutoring, apartment sales, and insurance.
On the 25th of August 2008, the 4th Conference of the Standing Committee of the 11th National People’s Congress (NPC) deliberated on The 7th Amendment to the PRC Criminal Law (draft). The Draft is the first time a proposal for providing protection of personal information by imposing criminal charges for violations on such information was put forward. This has raised broad public attention at all levels.
The current legal protections for personal information appear loosely in various laws including the Constitution and other Civil and Criminal Laws. The protections are presented in the forms of certain individual articles in the varying pieces of legislation. These provisions mainly protect a citizen's right to communications freedom, communications security and privacy in general and do not cover basic personal information such as personal address, phone numbers, etc.
Furthermore, the current applications of these articles are limited. Take for example the “crime of infringing upon a citizen's right to freedom of correspondence” provided for in the Criminal Law, Article 252, which provides not only the true intent of the law (the right to freedom of correspondence), the target of crime (the letters) but also requires “the circumstance is serious” as the standard of conviction. It is not easy for these provisions to be adapted to the developments of the information age as writing physical letters has declined.
In deliberating the Draft, a strong message that the constitutional principle of “respect for and insuring Human Rights” will also be embodied in the field of personal information protection, and such protection will mark an important step for respecting personal liberty and dignity.
Even more exciting is that the legislative process for the Personal Information Protection Law, started in 2005, is now entering a new phase. The Personal Information Protection Law (Draft) has been submitted to the State Council for discussion. We are now looking forward to success during the deliberation as well as the release of the Personal Information protection Law in the near future. This will help create a comprehensive system for the protection of personal information and provide effective legal safeguards to right of privacy.
Li Yongmei, associate, Domestic Dispute Resolution
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Standards for Cases of First Instance Adjusted by Supreme Court
On March 30, 2008, a notice was issued by the Supreme People’s Court adjusting the standards for jurisdiction of the high people’s courts and the intermediate people’s courts. The adjustment will reduce dramatically the number of first instance cases tried by the high people’s courts and the Supreme People’s Court, however, it will lead to a huge burden on the basic people’s courts and accordingly the intermediate people’s courts will also see their caseloads increase for cases of second instance. In other words, after the implementation of the new standard, most civil and commercial cases of first and second instance will be charged to the basic and the intermediate people’s courts.
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Crossing the Border Provides No Refuge from the New Mutually Recognized Commercial Contract Law
As of August 1st,
By Xu Xiaodan, King & Wood's International Litigation & Arbitration Group
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Statute of Limitations Extended for Commencing Arbitration in Labor Disputes
By Xu Xiaodan, King & Wood's International Litigation & Arbitration Group. Continue Reading...
Co-existence Agreements--"a must"--in Trademark Rejection Reviews
Recently we received a favorable decision for a client from the TRAB on a trademark rejection review. Since the rejected trademark and the cited mark differed only in one of ten letters and the two marks also covered similar goods, we expected the board to reaffirm the previous rejection based on Chinese trademark examination criteria. The obvious deciding factor resulting in a favorable review was the Co-existence Agreement entered into by our client with the owner of the cited mark. The co-existence agreement in essence consented to the registration and use of the trademark by our client in China.
Written by Zhu Fangjin, Associate, Trademark Group
Forum Shopping in China: Choice of Arbitration Tribunal
Lacking knowledge of and exposure to
Contracts in which one party is a foreign entity will contain foreign elements, allowing the parties to choose their jurisdiction without restriction under PRC law. The parties to such a contract may decide at their discretion whether to choose an arbitration tribunal within
A WOFE or CJV established or to be established by a foreign company in
By Huang Tao, Partner and Dai Yue
* Dai Yue is an associate of King & Wood's Litigation & Arbitration Group in
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Click here for the full article in Chinese. 中文
