On February 6, 2013, Jade Cargo
International Airlines, the first Sino-foreign cargo airline company, filed for
bankruptcy with Shenzhen Intermediate People's Court. Since October 26, 2015,
the bankruptcy administrator of Jade Airlines has auctioned three self-owned
Boeing 747 cargo airplanes offline on six different occasions, but all had
failed. On September 19, 2017, the three airplanes were placed on online
judicial auction platform operated by Alibaba with the court's approval. This
is the first time that a bankruptcy estate has been auctioned online in
accordance with rules promulgated by the Supreme People's Court of China with
respect to online judicial auction.
Aircraft is typically an asset with international mobility. However,
the online auction process of www.taobao.com has not fully taken into
consideration the needs of foreign participants in the auction of aforesaid
aircrafts, whether in relation to their opening of Taobao and Alipay accounts,
their payment of auction deposit, or in relation to their registration as
bidders. In addition, the State Administration of Foreign Exchange (“SAFE”)
generally prohibits domestic entities from receiving foreign currencies aboard as
bid deposit. These deficiencies of the online auction platform, together with
the restrictions imposed by SAFE, make it nearly impossible for foreign buyers
to register for the online judicial auction and pay the auction deposit.
In the said online auction, the JunHe team led by partner Mr. Zhenfeng
Yan represented a foreign client. After numerous communications and effective
coordination and explanations by our team with all concerned parties and
government authorities, our client was eventually permitted to pay the auction
deposit offline with US Dollars, and to open Taobao, Alipay, bank and cellphone
accounts, which allowed the foreign client to complete the bidder registration
process two days before the deadline.
In addition, aircraft inspection,
typically including document review, technical inspection, and test flight, is very
critical for the purchaser in used aircraft transactions. The original auction
announcement only allowed the bidder to walk around the auction object for
visual inspection. To make the technical inspection possible for our client,
Mr. Zhenfeng Yan submitted a written application to Shenzhen Intermediate
People's Court, and flew from Shanghai to Shenzhen together with the foreign
client to elaborate the importance and necessity of aircraft inspection. The
court and the bankruptcy administrator, after having been convinced, finally
approved our application for aircraft inspection, and this actually benefitted
all bidders in the auction process.
JunHe has been greatly appreciated by the
client, as with our expertise and professional service, it was enabled to
participate into the first ever online auction in Chinese bankruptcy
proceedings, to inspect the aircraft before the auction, and ultimately has
acquired one Boeing 747 aircraft.
JunHe will continue to serve
manufacturers, airlines, suppliers, leasing companies, banks, MROs and other
players in aviation industry with its proven expertise.
The leading partner of this project was Mr. Zhenfeng Yan.