China Huishan Dairy Holdings Co., the Hong Kong-listed company targeted by short sellers including Muddy Waters Capital LLC, said that a Chinese creditor has filed bankruptcy restructuring applications against two of the firm’s units.
The latest action is a further sign that creditors are closing in on the embattled dairy firm, as offshore and onshore lenders jostle for the firm’s assets. It comes shortly after Hang Seng Bank filed an application for the appointment of joint provisional liquidators on Nov. 25. Huishan Dairy earlier this month said that it is preparing for provisional liquidation.
Read more on Muddy Waters founder Carson Block’s views on Huishan and its preparations for provisional liquidation
The applications were against Huishan Dairy (China) Co. and Liaoning Huishan Dairy Group (Shenyang) Co. with the Intermediate People’s Court of Shenyang City on Nov. 28 and the creditor was only identified as a “PRC creditor.” The two companies are subsidiaries of Huishan Dairy and hold the majority of the group’s operations in China, the filing said.
The company is taking advice from its China legal adviser and will take steps available to it to preserve the group’s assets, it said on Tuesday. The recent actions taken by creditors come after Huishan Dairy said on Nov. 1 that more than half of its Chinese creditors signed an agreement to support an overall debt restructuring. That restructuring included injecting the group’s assets into a holding company in China, wholly owned by its onshore creditors.