Economic Observer Online
By Wan Xiaoxiao (万晓晓)
Mar 22, 2013
Translated by Chi Yi
Original article: [Chinese]

The founder of Suntech Power Holdings Co. and the company's current CEO have reportedly both had international travel bans imposed on them as a major subsidiary of the firm officially entered bankruptcy procedures this week.

Shi Zhengrong (施正荣), who founded and was recently removed as the chairman and CEO of the troubled solar manufacturer, has received an order not to leave the country, according to a report in Friday's Shanghai Securities News. Shi was born in China but now holds an Australian passport.

"It seems Shi is in real trouble this time," a source close to the Wuxi government told a reporter from the newspaper.

Public security agencies are also said to have slapped a temporary ban on Suntech's CEO David King (金纬) that will prevent him from traveling abroad.

The newspaper said that news of a travel ban had been confirmed by a senior executive of Wuxi Suntech, a subsidiary of Suntech Power that is undergoing "bankruptcy restructuring."

Another co-founder of the company who has since left Suntech told reporters that they had "heard David King really had been restricted from traveling abroad."  

It's reported that Shi Zhengrong is suspected of rewarding or otherwise transferring assets of Suntech to other companies; and that Suntech Power has carried out an internal investigation into these allegations.

One trading partner of Suntech and Shi Zhengrong that has come under heavy focus is Asia Silicon Co., Ltd. Shi was appointed chairman of that company's board in 2009.

Shi had been close to Asia Silicon since the company was founded in 2006. In the past Suntech has given financial support to Asia Silicon and also forwarded advanced payments to the company.

The nature of Shi's connection to Asia Silicon was unclear until 2008.

When Shi was still chairman and CEO of Suntech, he signed a long-term supply contract worth $150 million with Asia Silicon which heightened suspicions about the relationship between Shi and that company among some investors.

Wuxi Suntech was ordered by a local court to undergo bankruptcy reorganization on Wednesday. The case involves over 7.1 billion yuan ($1.14 billion U.S. dollars) of outstanding debt.

"Insolvency. That's why the Wuxi City Intermediate People's Court decided to accept the petition," a person who works at the court told the EO. According to this source, no deadline for the bankruptcy reorganization process will be set.

Nine banks are said to be involved in the case including the Industrial and Commercial Bank of China, Agricultural Bank of China and Bank of China.

According to the standard procedure, a bankruptcy trustee made up of a third-party accounting firm, lawyers and government institutions will be sent to Suntech and this group will also appoint a person to administer the operations of the company.

"At the moment a final plan for the reorganization hasn't been released and we still don't have a date for when the court hearings will begin, there is still a long way go," the source from the Wuxi court told the EO.

The source also emphasized that Wuxi Suntech was being dealt with according to bankruptcy reorganization (破产重整) procedures instead of bankruptcy auction (破产拍卖), which is an indication that there is still hope that the company can be saved.

Last week two new members were appointed to the company's board, which was interpreted as an indication that Suntech had embarked on a fundamental overhaul led by its state-owned investors.

Suntech's manufacturing and administrative headquarters are based in the city of Wuxi, which is located in the coastal province of Jiangsu, directly north of Shanghai.

Links and Sources
Shanghai Securities News: 施正荣被限制出境 尚德A股关系户“断臂疗伤”