Jia Yueting Bankruptcy Reorganization Procedures To Complete The Feasibility Of Compensation Scheme For Shareholders To Be Confirmed

On the morning of July 2nd, Jia Yueting issued an open letter saying that the procedure for bankruptcy reorganization was finally completed in the United States, and the reorganization plan came into effect. Meanwhile, the creditor trust was formally established and started operation.

He mentioned in particular that after obtaining the approval of the personal creditors Committee, he has reserved a percentage of less than 10% in the creditor trust, which is mainly used for the compensation of the shareholders of LETV. This seems to give investors some confidence. Up to the end of the first quarter of 2020, there were 280 thousand investors in music network.

However, there are still many uncertainties about whether Jia Yueting's position can be implemented.

In the United States, the application of personal bankruptcy reorganization process has finally been completed, for Jia Yueting, "means the restart of life". However, the market value of LETV has shrunk from 100 billion to one billion, and many creditors and investors of music are stifled.

Jia Yueting's open letter

On the morning of July 2nd, Jia Yueting, founder of music network, released an open letter entitled "starting a business and restarting life, with my apology, gratitude and commitment" on micro-blog and WeChat, claiming that the bankruptcy and reorganization procedures for its application in the United States were finally completed, and the reorganization plan came into effect. Meanwhile, the creditor trust was formally established and started operation. He said, "to me, it means the restart of life."

According to the relevant regulations of bankruptcy reorganization, Jia Yueting has been able to return to China after the bankruptcy reorganization has taken effect.

Prior to July 5, 2017, Jia Yueting went to Losangeles to hold a regular meeting. In July 6, 2017, it issued a personal statement in micro-blog, saying it would take full responsibility and fulfill its responsibilities. On the same day, music website announcements, Jia Yueting resigned from all duties.

Over the next three years, LETV has gradually become an empty shell, and its market value has fallen from 100 billion in the high light period to 1 billion 37 million yuan as of July 2, 2020.

A number of institutions were also buried. The broker who handles the pledge of shares has become the "bottom man". The Oriental Securities, Founder Securities and Western securities have all been implicated. Among them, the Western securities was forced to withdraw 439 million 400 thousand yuan of assets impairment reserve, and consumed 30% of its net profit in 2017.

In 2020, a quarterly report showed that among the top ten list of tradable shareholders, there were 5 institutions holding a total stake of 2.31%, including the fortune financial fund's Fuchun fixed asset management plan 1061 and the 1076 asset management plan, the Dacheng financial asset management plan, the gf's financial asset management plan, the China Europe financial assets management plan.

Up to the end of the first quarter of 2020, there were 280 thousand investors in music network. In June 5th, after the resumption of the finishing period, the 17 consecutive trading days ended in July 1st, and investors suffered heavy losses.

"Although in the past three years, I did not actually control and manage the music network, I could only look at the status quo of music network and be worried. But I have never forgotten the investors of music net, and I feel more sympathy for the loss and disappointment of everyone. As the founder of LETV, I am not to blame for the current situation of LETV. So, after I have been approved by my creditors' committee, I have reserved a percentage of less than 10% in the creditor trust, which is mainly used for compensation or compensation of the shareholders of the music network, which can be implemented after the completion of the relevant statutory procedures. I will also arrange a special team to coordinate the compensation of the shareholders of the music network. " Jia Yueting said in an open letter.

This seems to give the market some confidence. After the announcement of the open letter, a large number of bills came in, and 17 consecutive tablets were down for several times. After the afternoon of July 2nd, buyers' funds were still active. At the close, the single day turnover was as high as 138 million yuan, with a turnover rate of 13.37%.

Feasibility of compensation scheme to be confirmed

The market reaction is different for Jia Yueting's open letter. Although Jia Yueting declared "never forget the investors of music net, he is more sympathetic to the loss and disappointment of everyone." But it is not easy for shareholders to get compensation.

According to the twenty-first Century economic report, the most valuable asset in Jia Yueting's creditor's trust is FF's 10% stake. But the value of equity is determined by the value of the company. For example, at the end of 2018, the value of FF was $2 billion 500 million, and the value of the trust assets was worth 250 million dollars. But by May 2019, the fair price of FF equity assessed by BEAR was about 1 billion 900 million dollars, and the value of the trust had shrunk to 190 million US dollars.

On the evening of July 2nd, LETV announced that as of July 2, 2020, the company had not received any compensation plan or arrangement from the shareholders of the company concerned from Mr. Jia Yueting or Jia Yueting's debt processing team, and the company could not decide whether or not the shareholders of the LETV network could make an application for compensation to Mr. Jia Yueting. Feasibility.

"Jia Yueting said that the proportion of creditors in the trust has not been more than 10%, mainly used in the music network investors or compensation. In fact, the 10% ratio is based on the provisions of the laws of the United States, and the debt Committee requests to examine and explain the debtor's debts abroad, and 10% of assets to repay its debts worldwide. Zhu Bao, lawyer of Beijing Dacheng Law Firm, said.

LETV reminded that the proceeds of the reserve trust assets were the creditors of all Jia Yueting's personal debts that were submitted for claims.

Music network July 2nd announcement shows that according to Jia Yueting's previously disclosed "Fourth Amended Disclosure Statement With Respectto Debtor's Third Amended Plan of of" (Chinese) (on the fourth revision disclosure statement of the debtor's third reorganization plan), sixty-sixth pages show that, on the effective date, the trustee shall: (I) establish a late claim pool to settle any claims submitted for late claims; and (II) transfer 10% of the trust assets to the claims pool after the deadline. Overdue submission of claims pool does not carry out business activities, and is only submitted to the authorized claims according to the trust agreement, and is managed by the trustee in accordance with the terms and conditions of the trust agreement.

No more than 10% of the creditors' trust can be used for compensation or compensation.

According to the April 2019 announcement, the CSRC decided to initiate an investigation into the music website and Jia Yue Ting due to the fact that the music network and Jia Yue Ting were suspected of breaking the law of information disclosure.

Wang Zhibin, partner of Shanghai Ming Lun law firm, pointed out to the twenty-first Century economic report reporter that under the existing domestic legal framework, the SFC will impose administrative penalties on LETV or Jia Yueting, which is a precondition procedure for investors to initiate claims litigation. If the punishment is not landed, investors will not be able to initiate judicial proceedings.

"Besides, because Jia Yu Ting's reserved amount of debt is outside the territory, if the future investor obtains the fixed amount of debt through the judicial process and how the creditor's right can be cleared through cross-border means, Jia Yueting is not sure about this. Under the control of foreign exchange, Jia Yueting's plan may not be feasible. If Jia Yueting is sincere, he can return the reserved assets back to China and leave it to the notary office. Wang Zhibin added.

"If a shareholder claims a claim for false statement, he has not only strict administrative penalty preposition procedures, but also strict buying and selling time requirements. Even if compensation is made to shareholders, it is not an opportunity for any shareholder. LETV and Jia Yue Ting are currently being investigated by the SFC on suspicion of Information Disclosure Violation, hoping that the SFC will speed up the progress of the investigation. If it is indeed illegal, it should be punished early so that the market and investors can make clear the claim conditions, claim the claim earlier, and get compensation early if possible. Xu Feng, lawyer of Chuang Yuan Law Office in Shanghai, said.

Wang Zhibin pointed out that in addition to filing the investigation results, he filed a claim through a false statement. In other ways, there was also a shareholder's representative lawsuit, that is, shareholders could sue Jia Yueting on behalf of the company and demanded Jia Yue ting to be liable for the company. However, the prosecution is a shareholder, but the last beneficiary is the company, the interests are not linked, in fact, it is very difficult to implement, but in theory this way.

Xu Feng admitted to reporters that before the filing of the investigation results, the investors of music network only waited.

Before this, there was no lack of voice in the market. It is expected that LETV can make a comeback after Jia Yueting returns home. Now, Jia Yue Ting can return to China, but the quality assets such as new music and so on have been stripped.

If there is no whole day suspension, after July 20th, LETV will bid farewell to A shares and transfer to the third board. According to the regulations, the gem does not accept the application of the company's stock re listing, that is to say, after the delisting of LETV, it will not be re listed.

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