Insights | Kobre & Kim — Disputes and Investigations

Unfavorable economic conditions in China are putting many offshore companies in distress.
In a worst-case scenario, joint venture partners and private credit lenders may have to attempt to take over onshore projects, companies and assets.
A new Chinese company law coming into effect on July 2024 could smoot this path to recover – including by making it easier to replace legal representatives.

Chinese and other Asia-based investors have targeted the U.S. commercial real estate market recently, whether by direct investment or through CMBS or REITs.
However, the pandemic, credit tightening and regional bank failures have accelerated a market downturn, and many investors are vulnerable to losses.
Investors should consider proactive or counteroffensive strategies to enforce their legal rights, even against big industry players, to mitigate their losses and protect their bottom lines.

Minority shareholders have options to stand up to majority shareholders and directors, such as unfair prejudice claims or derivative actions.
However, if these do not achieve the desired result, one more tool is available to exert pressure: a just and equitable winding up.
We lay out how this tool can be applied in five key jurisdictions for corporate structures in Asia.

Minority shareholders may be surprised to learn that they have effective options when a director or other fiduciary has harmed the company.
However, the situation may be complicated when structures cross borders, as many corporate structures in Asia do, including spreading offshore.
Our Claim Monetization team explores how shareholders can deploy derivative actions in five key jurisdictions across Asia Pacific, the UK and the Caribbean as part of an effective cross-border strategy.

Minority shareholders may have certain remedies available when they feel their rights have been unfairly prejudiced by the majority.
However, the situation may be complicated when structures cross borders – typical corporate structures in Asia may spread across offshore and other key regions.
Our Claim Monetization team lays out the basic parameters of the tools open to minority shareholders across five key jurisdictions.

For parties embroiled in contentious joint-venture disputes, it is advantageous but challenging to find new ways to exert pressure on a counterparty.
If the counterparty is registered in Delaware, however, a pursuing a dissolution proceeding there can prove to be a decisive way to gain leverage.
As our Claim Monetization & Dilution team explains, this tactic saved a client in a recent case valuable time and money in reaching a favorable settlement.

Chinese businesses tend to favor offshore jurisdictions for setting up joint venture (JV) structures, but deadlock can ensue if partners differ into a dispute.
A litany of offshore legal tools exists, from provisions in the JV's constitutional documents to the appoint of a receiver to restore control to the wronged party.
However, the process for deploying these options differ based on each jurisdiction, and it is advisable to seek counsel before acting on any strategy.

A recent decision involving document disclosure in offshore courts presents an opportunity for PRC-based companies to obtain business intelligence.
This decision — which was made in the English Court of Appeal and will likely influence offshore jurisdictions and Hong Kong — has shed light on how nonparties can get copies of court documents, evidence, written arguments and judgments.
To leverage the opportunity effectively, local expertise of offshore court processes and this new decision, in addition to on-the-ground support in PRC, will be needed.