Posted on 26 Aug 2021
Lebanese steel trader Demco has issued a winding-up petition against a wholly-owned Hong Kong subsidiary of the Bohai Steel conglomerate, owned by the Chinese government. The hearing will be held on 6 October at the Hong Kong High Court.
The basis of the petition is an unsatisfied $6.6 million arbitral award rendered in favour of Demco Steel in November 2019 by the London Court of International Arbitration. The Tribunal decided Chinese mainland law was the applicable substantive law of the contract.
Bohai Steel did not participate in the final court hearing in London, and Demco Steel subsequently applied for an enforcement order of the arbitral award by the Hong Kong High Court.
The dispute between the parties arose due to an unperformed delivery by Bohai Steel of 15,000 tonnes of rebar to Demco, which was supposed to be shipped at the end of February 2016. Bohai Steel had earlier delivered three cargoes but then, due to pollution control measures taken by the government, the company suspended its operations for a short period.
“Demco is open to settling the matter … but it is also ready to wind up Bohai HK, in case the debt is not paid in full,” Demco owner Alex Demirdijan tells Kallanish. “In such a case, Demco will also consider going after Bohai’s parent companies, its senior managers, and also any successors in bankruptcy to collect the debt.”
Bohai Iron & Steel did not respond to requests for comment.
Bohai Iron & Steel was established in 2010 by the Tianjin SASAC and controls Tianjin Iron & Steel Group, Tianjin Metallurgical Group and Tianjin Tiantie Metallurgical Group, among others. It tried to enter bankruptcy proceedings in 2016 but restructuring plans stalled. The Delong Group joined in the reorganisation of the Bohai Group in January 2019 at the request of local authorities.
Part of the steel business of Bohai Group returned to profitability in 2019 after having undergone a restructuring process by Delong (see Kallanish passim).
The new company estimated 24.65 million tonnes of sinter output, 17.2mt of iron output, 20.77mt of crude steel output and 15.38mt of finished steel output in 2020.
Source:Kallanish
