{"id":46150,"date":"2019-11-26T01:20:18","date_gmt":"2019-11-26T07:20:18","guid":{"rendered":"https:\/\/3768346-fork.findlaw4.flsitebuilder.com\/?p=46150"},"modified":"2019-11-26T01:20:18","modified_gmt":"2019-11-26T07:20:18","slug":"robert-seiden-of-seiden-law-cited-in-law-review-article-for-work-as-receiver-over-chinese-companies","status":"publish","type":"post","link":"https:\/\/seidenlaw.com\/he\/blog\/2019\/11\/robert-seiden-of-seiden-law-cited-in-law-review-article-for-work-as-receiver-over-chinese-companies\/","title":{"rendered":"Robert Seiden Of Seiden Law Cited In Law Review Article For Work As Receiver Over Chinese Companies"},"content":{"rendered":"

EXCERPT FROM\u00a0Strategies for Asset Recovery from Mainland China<\/em><\/p>\n

BY HENRY W. LONGLEY | TEMPLE INT\u2019L & COMP. L.J.
\nFull Article Here<\/a>
\nA. Sino Clean Energy, Inc. v. Seiden\u2014Corporate Governance Strategy in Action<\/em><\/strong><\/p>\n

In May 2014, a Nevada state court appointed Robert Seiden, Esquire,(171)\u00a0<\/strong>the receiver of Sino Clean Energy, Inc. (Sino), after a group of U.S. investors requested the appointment when Sino went dark and caused economic losses.(172)<\/strong>\u00a0Sino is a Chinese Reverse Merger holding firm incorporated in Nevada with subsidiaries in Mainland China that produce coal-water slurry.(173)\u00a0<\/strong>The Sino bankruptcy case synthesizes the corporate governance strategy in the Chinese Reverse Merger context and shows some of the more creative techniques a receiver can employ when former firm insiders meddle with the recovery process.<\/p>\n

In May 2015, the receiver filed criminal charges with H.K. police alleging that Sino\u2019s chairman, Baowen Ren, fraudulently backdated a transfer of shares in Sino\u2019s H.K. subsidiary to a British Virgin Islands firm that Ren controlled\u2014pilfering Sino and its shareholders\u2014without the receiver\u2019s permission or knowledge.(174)<\/strong>\u00a0Despite attempts by the receiver\u2019s agents to resolve issues with Ren, Ren refused to settle or comply with the court\u2019s receivership orders.(175)<\/strong><\/p>\n

In 2014, the court-appointed receiver installed a new board of directors at the Sino holding firm in Nevada.(176)<\/strong>\u00a0Soon after, however, former board members, acting by and through Ren, filed a Chapter 11 petition for bankruptcy on behalf of the firm.(177)<\/strong>\u00a0The receiver, Seiden, moved to dismiss, and the bankruptcy court granted the motion\u2014a decision the former Sino directors later appealed.(178)<\/strong>\u00a0In the Chinese Reverse Merger context, in addition to establishing board control over the U.S.- based holding firm, controlling the board of the operating firm in China allows the receiver to go into Mainland China as the legal owner of operating assets \u201cstanding in the shoes of the company.\u201d(179)<\/strong>\u00a0Accordingly, before January 2015, the Nevada court-appointed receiver reported removal and replacement of the board of directors of Sino\u2019s operating firm in Mainland China with an American chairman.(180)<\/strong><\/p>\n

In February 2016, a Nevada district court judge overseeing the same action held Ren in criminal contempt for repeatedly violating its receivership orders.(181)\u00a0<\/strong>In addition to an outstanding civil\u00a0per diem<\/em>\u00a0penalty of $500 ordered in June 2015, the court ordered a bench warrant to imprison Ren for his contempt.(182)<\/strong>\u00a0The court ordered Ren to be jailed until he transferred Sino\u2019s official corporate seal, known as a \u201cchop,\u201d(183)<\/strong>\u00a0to the receiver.(184)<\/strong>\u00a0The court also held Ren\u2019s illegal transfer of Sino\u2019s assets to be invalid.(185)<\/strong>\u00a0The receiver stated that the bench warrant would be sent to Interpol in Beijing, along with a request for assistance from Chinese authorities to arrest Ren.(186)<\/strong><\/p>\n

Meanwhile, the ongoing bankruptcy case against Sino also affected its existing contractual liability. The appointment of a receiver can change who possesses control over a firm, but it does not affect the corporate existence of a firm, which means the firm continues to be liable for its existing contracts after the appointment of a receiver.(187)<\/strong>\u00a0According to the January 2015 report, the receiver communicated with Sino\u2019s suppliers, business partners, and its customers around the globe, contacted Sino\u2019s Chinese banks to change signatories and gain control over accounts, put in place an interim management team to run day-to-day operations, and selected an independent auditor to advise on the economic state of Sino and its subsidiaries.(188)<\/strong><\/p>\n

In\u00a0Sino Clean Energy, Inc. v. Seiden<\/em>, former directors of Sino appealed the dismissal of their 2015 bankruptcy petition\u2014arguing that federal bankruptcy law preempts a receiver appointed under state law from barring a corporation from filing for bankruptcy.(189)<\/strong>\u00a0In January 2017, the Court affirmed the bankruptcy court\u2019s dismissal because appellants did not have authority to file for bankruptcy on behalf of Sino at the time of the petition.\u00a0(190)<\/strong><\/p>\n

The court found the appellants\u2019 argument unpersuasive because the receiver removed appellants in 2014\u2014installing a new board of directors more than a year before appellants filed their bankruptcy petition in 2015.(191)\u00a0<\/strong>The court\u2019s order did not affect a corporation\u2019s right to file for bankruptcy but prevented a former board of directors from filing by holding that only a corporation\u2019s current board of directors can file for bankruptcy.(192)<\/strong>\u00a0The district court\u2019s decision demonstrates that a courtappointed receiver is unequivocally empowered to reconstruct the board of directors of a Chinese Reverse Merger holding firm based in the United States. Moreover, the\u00a0Sino Clean Energy, Inc.<\/em>\u00a0saga shows that a court-appointed receiver with control of a Chinese Reverse Merger corporate structure can capably affect its Mainland China-based management at the operating business level as well.(193)<\/strong><\/p>\n

171. THE Seiden Law,\u00a0supra<\/em>\u00a0note 134 (detailing that Seiden has vast experience with integrity monitoring and has been appointed receiver over twenty times in the United States);\u00a0see also<\/em>\u00a0Stevenson & Goldstein, supra note 33 (\u201cRobert W. Seiden is a Wall Street bounty hunter. He tracks down executives of Chinese companies that listed on stock exchanges in the United States and then blew up.\u201d).<\/p>\n

172. Sino Clean Energy Inc. v. Seiden, 565 B.R. 677, 679\u201380 (D. Nev. 2017);\u00a0BVI Shell Company Allegedly Used to Steal US and Chinese Shareholder Interests in Energy Firm<\/em>, CARIBBEAN NEWS NOW! (June 26, 2015), http:\/\/seidenlaw.com\/wp-contentwww.caribbeannewsnow.com\/2015\/06\/26\/bvishell-company-allegedly-used-to-steal-us-and-chinese-shareholder-interests-in-energy-firm\/.<\/p>\n

173. Sino Clean Energy Inc., 565 B.R. at 679\u201380;\u00a0Sino Clean Energy, Inc. Prospectus<\/em>, NASDAQ (Dec. 21, 2010), http:\/\/seidenlaw.com\/wp-contentwww.nasdaq.com\/markets\/spos\/filing.ashx?filingid=7820499;\u00a0see BVI Shell Company Allegedly Used to Steal US and Chinese Shareholder Interests in Energy Firm, supra note<\/em>\u00a0172 (describing the corporate structure of Sino Clean Energy);\u00a0see also<\/em>\u00a0Markus Aarnio, Sino Clean Energy Poised to Double Production Capacity in 2012, SEEKING ALPHA (Jan. 15, 2012, 7:45 AM), http:\/\/seidenlaw.com\/wp-contentseekingalpha.com\/article\/319701-sino-clean-energy-poised-to-doubleproduction-capacity-in-2012 (describing Sino Clean Energy as the fifth largest producer of coalwater slurry fuel by sales in China).<\/p>\n

174.\u00a0BVI Shell Company Allegedly Used to Steal US and Chinese Shareholder Interests in Energy Firm<\/em>,\u00a0supra<\/em>\u00a0note 172.<\/p>\n

175.\u00a0Id.<\/em><\/p>\n

176. Written Consent,\u00a0supra<\/em>\u00a0note 168.<\/p>\n

177. Sino Clean Energy Inc., 565 B.R. at 680.<\/p>\n

178.\u00a0Id.<\/em><\/p>\n

179. Michael Rapoport,\u00a0Court Appointee Chases (and Finds) Investor Cash that Vanished in China<\/em>, WALL ST. J. (June 21, 2015, 4:28 PM), http:\/\/seidenlaw.com\/wp-contentwww.wsj.com\/articles\/court-appointeechases-and-finds-investor-cash-that-vanished-in-china-1434918506.<\/p>\n

180.\u00a0U.S. Court-appointed Receiver for Sino Clean Energy Inc. (Nasdaq \u201cSCEI\u201d) Taking Control of Chinese Company,<\/em>\u00a0PR NEWSWIRE (Jan. 25, 2015), http:\/\/seidenlaw.com\/wp-contentwww.prnewswire.com\/newsreleases\/us-court-appointed-receiver-for-sino-clean-energy-inc-nasdaq-scei-taking-control-ofchinese-company-300018796.html.<\/p>\n

181.\u00a0U.S. Court Orders China Businessman Jailed for Defying Court-Appointed Receiver and Judge\u2019s Order to Cede Control of the Company to the Receiver<\/em>, PR NEWSWIRE (Feb. 29, 2016), http:\/\/seidenlaw.com\/wp-contentwww.prnewswire.com\/news-releases\/us-court-orders-china-businessman-jailed-fordefying-court-appointed-receiver-and-judges-order-to-cede-control-of-the-company-to-thereceiver-300228158.html.<\/p>\n

182.\u00a0Id.<\/em><\/p>\n

183. Dezan Shira & Assocs.,\u00a0Company Chops in China: What are They and How to Use Them,\u00a0<\/em>CHINA BRIEFING (May 10, 2017), http:\/\/seidenlaw.com\/wp-contentwww.china-briefing.com\/news\/2017\/05\/10\/use-ofcompany-chops-in-china.html (explaining that \u201cthe chop\u201d is mandatory to do business in Mainland China and functions as the company\u2019s official signature).<\/p>\n

184.\u00a0U.S. Court Orders China Businessman Jailed for Defying Court-Appointed Receiver and Judge\u2019s Order to Cede Control of the Company to the Receiver, supra<\/em>\u00a0note 181.<\/p>\n

185.\u00a0Id.<\/em><\/p>\n

186.\u00a0Id.<\/em><\/p>\n

187.\u00a0British Virgin Islands\u2014Restructuring and Insolvency<\/em>, OGIER (Nov. 4, 2013), www.ogier.com\/publications\/british-virgin-islands-restructuring-and-insolvency.<\/p>\n

188.\u00a0U.S. Court-appointed Receiver for Sino Clean Energy Inc. (Nasdaq \u201cSCEI\u201d) Taking Control of Chinese Company, supra\u00a0<\/em>note 180.<\/p>\n

189. Sino Clean Energy Inc. v. Seiden, 565 B.R. 677, 679 (D. Nev. 2017).<\/p>\n

190.\u00a0See id<\/em>. at 681, 683 (finding that Nevada law gives a corporation\u2019s\u00a0current<\/em>\u00a0board of directors exclusive power to file for bankruptcy);\u00a0see also<\/em>\u00a0Richard Levin,\u00a0Recent Developments<\/em>\u00a0in Bankruptcy Law<\/em>, JENNER & BLOCK \u00b6 4.1.a (July 2017), http:\/\/seidenlaw.com\/wp-contentjenner.com\/system\/assets\/assets\/10294\/original\/Recent%20Developments%20in%20Bankr uptcy%20Law%20-%20July%202017.pdf (\u201cState law here authorizes the current directors to authorize a filing.\u201d).<\/p>\n

191. Sino Clean Energy, 565 B.R. at 681.<\/p>\n

192.\u00a0Id.<\/em>\u00a0at 677; Levin,\u00a0supra<\/em>\u00a0note 190.<\/p>\n

193. See generally U.S. Court-appointed Receiver for Sino Clean Energy Inc. (Nasdaq \u201cSCEI\u201d) Taking Control of Chinese Company, supra<\/em>\u00a0note 180.<\/p>\n

Read Full Article<\/a><\/p>","protected":false},"excerpt":{"rendered":"

EXCERPT FROM\u00a0Strategies for Asset Recovery from Mainland China BY HENRY W. LONGLEY | TEMPLE INT\u2019L & COMP. L.J. Full Article Here A. Sino Clean Energy,…<\/p>","protected":false},"author":2,"featured_media":60189,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12],"tags":[],"class_list":["post-46150","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-firm-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/posts\/46150","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/comments?post=46150"}],"version-history":[{"count":0,"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/posts\/46150\/revisions"}],"wp:attachment":[{"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/media?parent=46150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/categories?post=46150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seidenlaw.com\/he\/wp-json\/wp\/v2\/tags?post=46150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}