DEALS
Zhong Lun Assists New Journey and Other Investors in Reorganization of Hengkang Medical
Zhong Lun Assists New Journey and Other Investors in Reorganization of Hengkang Medical
On June 23, 2022, the Intermediate People's Court of Longnan City of Gansu Province ruled to confirm that the reorganization plan of Hengkang Medical Group Co., Ltd. (“Hengkang", 002219.SZ) had been executed and close the reorganization proceedings. On July 4, 2002, Hengkang had its delisting risk warning removed, and its stock symbol was changed from “* ST Hengkang" to “Hengkang Medical", marking its successful reorganization and a turning around of “the first private hospital going public in China".
Zhong Lun assisted Beijing New Journey Healthcare Group Co., Ltd. (“New Journey") and other joint financial investors of Hengkang in investing in the reorganization and helped New Journey acquire the controlling interest in Hengkang. This mandate further consolidates Zhong Lun’s strong record in representing investors in reorganization investment in listed companies.
Hengkang is mainly engaged in providing medical services. It runs 11 general and specialized hospitals and owns 36 varieties of drugs, including Duyiwei capsules, as well as the well-known Chinese trademark “Duyiwei". This deal, one of the first reorganizations to which the latest regulatory rules for listed companies promulgated by the Shenzhen Stock Exchange and other regulators in 2022 are applied, has encountered more challenges than ever in legal compliance across the board. In addition, the deal involves many complex legal issues, such as the performance of a clause regarding repurchase of shares in a fund in the reorganization of a listed company, and access of foreign investment, which had a direct bearing on the progress of the reorganization and drew great attention from both regulatory authorities and the general public.
To help investors achieve their investment goals, Zhong Lun provided legal services throughout the entire reorganization, including supporting their bid to be eligible reorganization investors, negotiating the reorganization investment agreement and reorganization plan, and designing post-investment operation plans. The reorganization has effectively resolved Hengkang’s debts and achieved a win-win outcome for investors, creditors and debtors.
The Zhong Lun team for this deal was led by partner Bing WANG and supported by partner Tao LIU and associates Chonglin WANG, Junlin PU, Ziyu ZENG, Erchuan Li, etc.
