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Sanlu goes into bankruptcy proceedings
By Ding Qingfen (chinadaily.com.cn)
Updated: 2008-12-25 14:23

Sanlu goes into bankruptcy proceedings

Sanlu's distributors gather around its headquarters, December 24, 2008, trying to get money back. [CFP] 

Shijiazhuang city government said this morning that Sanlu, in which it has a controlling interest, is going into bankruptcy proceedings with a total debt of 2.66 billion yuan ($388 million) against assets valued at 1.56 billion yuan.

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The total debt includes a commercial loan of 902 million yuan secured on Dec 19 to meet the medical expenses of and compensation to children affected by tainted milk powder produced by the company.

In a statement, the Shijiazhuang government said Sanlu has already paid back 30 percent of the money it owed to distributors and is planning to make another payment on Jan 10, 2009. It estimated that the entire debt to distributors will be paid off in the second half of 2009.

Shijiazhuang-based Sanlu Group, which was closed in September for having sold melamine-tainted milk powder, is now under bankruptcy investigation into its corporate assets by a receiver appointed by the Shijiazhuang Intermediate People's Court.

Shijiazhuang Commercial Bank, a major creditor of Sanlu, on Monday petitioned the court to issue a bankruptcy order against the debt-ridden company. The court sent the order to Sanlu on Tuesday.

The local government did not announce the name of the receiver which will manage Sanlu and will be given six months to sell the company's assets to repay the creditors.


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