Pioneer Iron and Steel, a trading company owned by the mainland's so-called "steel princess", Diana Chen Ningning, has gone into provisional liquidation in Hong Kong, owing creditors more than US$516 million.
People informed of the situation said the company mainly traded iron ore and owes money to Anglo Australian mining giant BHP Billiton and Standard Chartered.
Chen declined to comment as did spokesmen for BHP Billiton and Standard Chartered. Chen is a well- known and well-connected entrepreneur on the mainland. She is the granddaughter of a former government mining minister, Lu Dong, and is worth US$1.3 billion, according to the Hurun Rich List for 2009.
She is commonly referred to as the "steel princess" in mainland media because of her wealth and strong party connections. The offspring of current and former party ministers are commonly known as "princelings".
The High Court ordered Pioneer into provisional liquidation, which means its liquidators have full control of the company's assets, last Tuesday,according to a report sent to the company's creditors and reviewed by this newspaper.
The provisional liquidation order is due to be published today.
The August 3 petition to wind up Pioneer Iron and Steel in Hong Kong was issued by joint provisional liquidators William Tacon, of global restructuring company Zolfo Cooper and Roderick John Sutton, an insolvency expert at financial services conglomerate FTI Consulting's Hong Kong office.
The petition, reviewed by this newspaper, says Chen has refused to supply information to the liquidators about the company's affairs. It also questions the transfer of assets including stakes in external companies out of Pioneer Iron and Steel, although the liquidators admit they do not yet know where they have gone or when they were moved.
When Chen met the restructuring professionals on July 14, the petition said, she gave "little information concerning the affairs of the company" and "claimed she does not have any document or information about the company".
Pioneer Iron and Steel is incorporated in the British Virgin Islands and has an office and some assets in Hong Kong. The company went into liquidation in the BVI on June 25. The liquidators had to apply for the company to be wound up in Hong Kong as well because it has assets and staff in the city. Once a company is in provisional liquidation, its directors have no power to sell off its assets or transfer them out of the business.
The August 3 winding up petition said Chen had transferred Pioneer's 100 per cent shareholdings in three British Virgin Islands-incorporated companies out of the company. But the liquidators, Tacon and Sutton, say in the petition, "full details of the transfers including the relevant dates and the transferrees are not yet known ... the divesting of these entities warrants further investigation."
The only Hong Kong assets of Pioneer that the liquidators were able to identify, the August 3 petition says, were two Nissan Elgrande cars worth HK$600,000 and a bank account containing HK$8,000 cash. The liquidators also identified another bank account with Standard Chartered in Hong Kong, but said they did not know how much money it contained.
The petition also said Pioneer owns shares in an iron ore pellet company in Zhuhai , as well as two companies that are incorporated in the British Virgin Islands. One of those BVI companies - Pioneer Freight Futures Company - is also in liquidation, the petition said.
The liquidators would now seek court orders in Hong Kong to require Chen and Pioneer's former directors to give evidence, said a person familiar with the case.
Sutton of FTI Consulting declined to comment. A spokesman for Zolfo Cooper could not be reached.
Location