Sancon Resources Recovery in Chapter 7
When a troubled business is badly in debt and unable to service that debt or pay its creditors, it may file (or be forced by its creditors to file) for bankruptcy in a federal court under Chapter 7. A Chapter 7 filing means that the business ceases operations unless continued by the Chapter 7 Trustee. A Chapter 7 Trustee is appointed almost immediately, with broad powers to examine the business's financial affairs. The Trustee generally sells all the assets and distributes the proceeds to the creditors. This may or may not mean that all employees will lose their jobs. When a very large company enters Chapter 7 bankruptcy, entire divisions of the company may be sold intact to other companies during the liquidation.[citation needed]
In this case it looks like that they are forced in Chapter 7 so not voluntary.
The case
The company involved in the following litigation.
Dragon Wings Communications Limited, a Hong Kong corporation and Wong Yee Tat, an individual are the first and second plaintiff. They filed a complaint on July 25, 2008 in the District Court of the Hong Kong special Administrative Region, Civil Action No. 3251, against the first defendant, Fintel Group Limited for breach of contract. The Company is the second defendant because plaintiff claimed Fintel Group Limited is a wholly owned subsidiary of the Company. Under the writ, the plaintiff claimed that pursuant to a written stock purchase agreement, the first defendant shall purchase the first plaintiff’s common stock by common shares of Financial Telecom Limited (USA) inc. (replaced by shares of MKA Capital Inc. from June 2006) or pay to the plaintiff cash of $94,172 in lieu of the shares. Plus the interest and cost of litigation, the total amount claimed by plaintiff were $104,966. The court adjudged that the first defendant do pay the plaintiffs damages on September 08, 2008 and also adjudged that the second defendant do pay the plaintiffs damages on December 10, 2008. The Company denied all allegations in the complaint because Fintel Group Limited is no longer our subsidiary since November 27, 2006. The Company accrued $104,966 of potential liability in the accompanied financial statements based on the letter of claim received from the plaintiff.
I guess these things happen more often with RTO's, so there is nothing to worry about. Even if they have to pay the claim nothing is lost.
Tuesday, December 7, 2010
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How come Sancon signed an Undertaking Agreement in August 2006 for this transaction ?
ReplyDeleteThe concern is that Sancon is not paying the creditor even they lost the court case. This is not the right attitude to do business. Will harm suppliers and investors' confidence.
ReplyDeleteWhy didn't the Management and Directors not taken enough measures to prevent this to happen. The petition is harmful to Sancon's business goodwill.
ReplyDeleteWe shall be careful continue giving credit to Sancon if they have the habit of not paying creditors.
ReplyDeleteWho likes to invest in a company facing Chapter 7 ??? Management is hiding the case for so many years since 2008 when they were being sued.
ReplyDeleteOh, that is a tragedy to Sancon's image. This petition will always stay in their history and big investors will not pick it in their portfolio.
ReplyDeleteLoose and bad management is always the problem of Chinese company. No concept of business law.
ReplyDeleteIs Sancon in essence a garbage collecting company? Looks like its management is also garbage.
ReplyDeleteThat is a good comment. Garbage management team.
ReplyDeleteNo, you are wrong. They are Chinese - no law concept.
ReplyDeleteSancon will bankrupt. There is crisis going on with the company. David Chen and Jack Chen are brothers and controlling the company future.
ReplyDeleteThe bankruptcy court case will be in January 2011. What if Sancon loses ?
ReplyDeleteThe bankruptcy petition court hearing is fixed on 23 June 2011 in Nevada, USA. The stock price will be affected from now to June 2011.
ReplyDeleteRE: THE CO. HAS EARNED A FEW CENTS A SHARE FOR LAST 3 YRS. ACCORDING TO INFO. I RECIEVED. THUS WE WILL STILL BE BUYING SHARES UNTIL THE CO. IS SOLD TO THE BROTHERS OR ANOTHER CO. W/GOOD REPUTATION. TO CARRY FORWARD A GREAT BUSS. OPPORTUNITY.
ReplyDelete