Addleshaw Goddard's restructuring team has acted on behalf of over 100 bondholders, across 5 offshore issuances, to successfully cause $1.7bn of direct claims to be made against Peking University Founder Group Company Limited (PUFG) in relation to keepwell backed bonds.

The AG team was headed by Paul Fleming (London) and Lance Jiang (Hong Kong).

There is an estimated US$586 billion of Chinese offshore bonds issued in relation to PRC onshore companies which are protected by 'keepwell deeds' (a pledge to keep an offshore subsidiary solvent) backed by PRC holding companies rather than a conventional direct guarantee arrangement. The effectiveness of these keepwell deeds is for the first time being tested following a record US$30bn of bonds defaulting in 2020.

In the novel US$13 billion restructuring of the PRC state-owned enterprise Peking University Founder Group Company Limited (PUFG), which defaulted on its bonds in early 2020, its administrators refused to recognise US$1.7 billion of offshore keepwell bonds.

In a first-of-its-kind action, Addleshaw Goddard's leading restructuring team has acted to successfully cause four PUFG subsidiaries to make direct claims against PUFG equivalent to the US$1.7 billion of keepwell bonds. 

Within a swift 6 month period, Addleshaw Goddard established an ad hoc committee of bondholders, arranged funding for the trustees to take action, caused claims to be made in the PUFG administration – and in a dynamic move took control of major parts of the PUFG structure through the winding up of the relevant four BVI issuers and HK guarantors.

Addleshaw Goddard's restructuring team are now tasked with acting for the liquidators at Deloitte and Alvarez & Marsal who are controlling and co-ordinating four separate liquidation estates to achieve a return for the US$1.7bn offshore keepwell bondholders.

In a move in which has not gone unnoticed, Addleshaw Goddard have been engaged to achieve a similar result in relation to a growing number of the bondholders in the US$2.45 billion of guaranteed and keepwell bonds backed by Tsinghua Unigroup Co. with proceedings already having been issued in one tranche.