CDC Kicks Off China Bankruptcy Parade 中华网打开赴美上市公司破产魔盒
The confidence crisis in US-listed China stocks has claimed its latest victim in CDC Corp (Nasdaq: CHINA), the former high-flying software maker which filed for bankruptcy in the US on Wednesday as it struggled under the weight of a costly lawsuit. (Chinese article) Old-timers will recall that this company, formerly known as Chinadotcom, was one of China’s first US-listed web firms to go public more than a decade ago. That makes its current demise somewhat significant, though the company had faded from prominence for quite a while before this latest development. In an ironic twist, CDC’s ticker symbol is CHINA, symbolizing the broader downfall of many US-listed China stocks in recent months amid a crisis of confidence about their accounting. In CDC’s case, the crippling blow was a recent $65 million judgment against it resulting from a 2009 lawsuit from another company called Evolution CDC. (English article) There are no other details about the lawsuit, but based on the plaintiff’s name and fact that it was filed 2 years ago, this looks more like a disagreement between CDC and one of its vendors than a shareholder lawsuit like many of the ones we have seen in recent weeks against Chinese firms whose share prices have plunged on a steady stream of news about financial irregularities. CDC could nowl see similar shareholder suits coming its way, as its shares plunged more than 50 percent after it announced the bankruptcy filing. I checked the details on CDC’s major shareholders and was surprised to find such big names as CalPERS, the massive California pension fund, and Morgan Stanley (NYSE: MS) among them as of June, underscoring just how popular these companies had become among investors before their recent demise. I’m sure we’ll see more similar bankruptcy filings in the next year or two, as the steady stream of shareholder lawsuits now being lodged get resolved in the courts, many in shareholders’ favor. In the latest of those, a company named SinoTech Energy (Nasdaq: CTE) is facing a new class action lawsuit for allegedly including misleading information in its registration statement. (lawsuit announcement) Stay tuned for more such lawsuits, and subsequent bankruptcy filings, as the ongoing confidence crisis plays out over the next 2 years.
Bottom line: CDC Corp’s bankruptcy is the first but almost certainly not the last for US-listed Chinese firms, which are defending themselves against a raft of shareholder lawsuits.
Related postings 相关文章:
◙ US China Stocks: Bloodbath Becomes Correction 在美上市中资股遭抛售 迈入股价修正新阶段
◙ US-Listed China Firms Fight Back — Finally 中国赴美上市公司最终还击
◙ Securities Regulator Seizes on US Confidence Crisis 中国证监会或介入企业海外上市
