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Zhong Lun Acts for Citicorp in a Nearly US$500 Million Bond Keepwell Dispute
Zhong Lun Acts for Citicorp in a Nearly US$500 Million Bond Keepwell Dispute
Zhong Lun Law Firm recently acted for Citicorp International Limited, in its capacity as trustee for certain US dollar-denominated bonds, in a case involving a keepwell arrangement with a value of nearly US$ 500 million, before Beijing First Intermediate People’s Court. The firm assisted the trustee in successfully reaching a settlement with the bond issuer and the keepwell provider. This is one of the precedential cases accepted and heard by a Chinese court concerning keepwell arrangements backing offshore US dollar-denominated bonds. It reflects the preliminary judicial positions adopted by bankruptcy administrators and Chinese courts on cross-border keepwell arrangements, offering valuable practical guidance for international investors participating in similar cross-border financing structures.
Keepwell arrangement is one of the common credit enhancement mechanisms used by Chinese mainland-based enterprises in offshore bond issuances. Its validity and enforceability, in particular the judicial approaches that Chinese courts may adopt in recognizing such arrangements in cross-border bankruptcy scenarios, have long been of significant interest to market participants. Prior to this case, few Chinese courts had heard such matters.
The case was led by partner Decai Zhang. Core team members included partners Li Zhang (Nelly) and Xiuling Lin (Jean), as well as associate Yuanyuan Zhang.
