Legal nature of a keepwell deed

Keepwell deeds are widely used in offshore financing transactions, but such arrangement has only been tested in the PRC courts in recent years. In this alert, we explore issues relevant to the enforceability of such arrangements in Mainland China.

ECOtality, an electric vehicle charging station manufacturer and a recipient of 2009 stimulus package Department of Energy grants, filed for bankruptcy on September 17. The company received $100.2 million in grants, but the Department froze the remaining $2.5 million in grants on August 8.

On March 20, Suntech, a Chinese solar manufacturing company, declared bankruptcy. Questions have arisen on how the country’s solar industry will now cope with overcapacity issues which stem from a decline in demand from Europe. The declaration comes a week after the company announced it had defaulted on $541 million of bonds.