Can investors get paid?
Author |Small debt.
* |Bond Market Observation The protracted Kaidi Ecological Environment Co., Ltd. (hereinafter referred to as "Kaidi Ecology")* false statement liability dispute has recently made new progress.
Previously, the Wuhan Intermediate People's Court and the Hubei Provincial High People's Court both ruled in the first instance that the investor filed a lawsuit against Kaidi Ecology and all intermediaries because it was involved in the bankruptcy proceedings of Kaidi Ecology and did not declare its claims for infringement. The investor filed an application for retrial with the Supreme People's Court of the People's Republic of China (hereinafter referred to as the "Supreme People's Court") because of its dissatisfaction with the above ruling.
Recently, the Supreme People's Court issued a ruling ruling ruling to directly arraign the case.
Source: Jiyu Litigation Support Center.
Kaidi EcologyMisrepresentation casesThe beginning and the end
On May 11, 2020, the China Securities Regulatory Commission (CSRC) issued an administrative penalty decision ([2020] No. 9) to Kaidi Ecology, which showed that Kaidi Ecology failed to disclose the company's major events in a timely manner, the company's shareholders and its affiliates illegally occupied the company's funds, and disclosed false or seriously misleading statements and other violations.
Since then, a number of small and medium-sized investors have successively sued Kaidi Ecology for financial and credit fraud, involving claims of 5.1 billion yuan in civil compensation for false statements.
Investors said that Kaidi Ecology misled its investment decisions by misrepresenting the company's operating conditions and actual solvency. In addition, Kaidi Ecology has also violated the "Basic Standards for Enterprise Internal Control" for a long time, and there are financial management problems such as accounting vouchers and raised funds that have not been effectively audited, financial statements and account sets of data of some subsidiaries are inconsistent, and incomplete financial data, and there are corporate governance problems such as management and governance overriding control.
According to the "Reorganization Plan (Draft)", the deep-seated reason for the outbreak of the debt crisis of Kaidi Ecology is that "Kaidi Ecology lacks scientific and rigorous industrial research and financial law analysis in the process of transformation to a biomass power generation enterprise, and its management and financial management are extremely chaotic, there are major defects in internal control, and the lack of due foresight of changes in industrial policies, resulting in serious deterioration of financial conditions and inability to maintain normal operating cash flow".
On October 28, 2020, the Shenzhen Stock Exchange made a decision to terminate the listing of Kaidi Ecology due to the fact that the audit report was issued with no opinion due to the financial report for three consecutive years, and the net profit and net assets attributable to shareholders of the parent company in 2019 were both negative.
On March 10, 2021, the creditor applied to the Wuhan Intermediate People's Court for bankruptcy reorganization on the grounds that Kaidi Ecology could not repay its due debts. On March 15, 2021, the Wuhan Intermediate People's Court ruled to accept China Railway Trust's application for reorganization of Kaidi Ecology, appointed the liquidation team of Kaidi Ecological Company as the administrator of Kaidi Ecological Company, and ruled on August 4, 2021 to merge and reorganize a total of 21 companies of Kaidi Ecology and its subsidiaries.
However, the merger and reorganization plan (draft) was not approved at the two creditors' meetings on May 12 and September 7, 2022. According to investors told Red Journal Finance, the reorganization plan did not make a certain amount of cash repayment to ordinary financial creditors, which caused dissatisfaction among creditors.
Source: Kaidi Ecological Substantial Merger and Reorganization Case Reorganization Plan.
Although the reorganization plan (draft) was not approved at the creditors' meeting, the court found that the creditors with property-secured creditors and ordinary creditors could obtain repayment benefits that were not less than those that could be obtained in accordance with the bankruptcy liquidation procedure, and that the business plan was feasible, and made a ruling on the merger and reorganization plan (draft) and terminated the reorganization procedure on October 25, 2022.
Ma Jianrong, a lawyer who defended the rights of the first investor, said that "at present, the part of the small cash payment should have been paid, and the non-cash settlement arrangements such as share transfer and trust shares should also be dealt with accordingly, and there is no clear timetable for the actual income and redemption."
To claim compensation from the intermediary, it is necessary to declare the creditor's rights separately
Because Kaidi Ecology entered the bankruptcy reorganization procedure, the Wuhan Intermediate People's Court and the Hubei Provincial High People's Court rejected the investor's lawsuit on the grounds that the creditor failed to declare its claims to the administrator, which violated the principle of not accepting individual repayment claims after entering the bankruptcy liquidation procedure.
Previously, the Wuhan Intermediate People's Court rejected the plaintiff's lawsuit Source: Judgment Document Network.
Lawyer Ma Jianrong said that the investors had actually declared bankruptcy claims and had already obtained confirmation of their claims, but the first and second instance rulings held that the investors had previously declared on the grounds of bond default, and required the investors to make further declarations on the grounds of misrepresentation and infringement.
The reasons and results of the first-instance and second-instance rulings are indeed wrong", Ma Jianrong replied, "In bankruptcy proceedings, whether based on bond default or misrepresentation infringement, there is no need to make a second declaration if the investor has fully declared and confirmed the bankruptcy claim. Moreover, this time the rights protection is mainly for intermediaries to claim compensation, and there is no need for investors to declare their claims separately."
The intermediaries who were claimed this time include Founder **, Zhongshen Zhonghuan Certified Public Accountants, and some actual controllers, directors and executives of Kaidi Ecology. The Supreme People's Court directly arraigned the case of Kaidi Ecology's ** misrepresentation, and the basis for filing the case is still based on the provisions of ** misrepresentation, and there are still many issues controversial in judicial practice in such cases, and these disputes will have the opportunity to be clarified and unified in this case. This time, the Supreme People's Court will make a direct determination on the disclosure date, causal relationship, loss and other factors in such cases, and there is a special circumstance in this case, that is, it may be impossible to appeal against the "final trial of the first instance".
Kaidi Ecology was once known as "the first share of biomass power generation", public information shows that Kaidi Ecology business covers green energy research and development, environmental protection power generation, raw coal sales, has operated 40 biomass power plants, signed 285 biomass power generation cooperation framework agreements.
The Kaidi Ecological ** misrepresentation case has been delayed for many years, and this time it will be directly arraigned by the Supreme People's Court, can the rights and interests of investors be reasonably protected?Will investors be reasonably compensated for claims against intermediaries?What kind of responsibility should Kaidi ecology bear?Readers are welcome to discuss in the comment area.