The Joint Official Liquidators ("JOLs") of the Registrant refer to their
previous announcements dated 3, 15 and 29 August 2012.
Since their appointment the JOLs have continued their efforts to take control
of the Registrant's assets and investigate the affairs of the Registrant.
In particular, the JOLs have focused on the following matters ("Key Issues"):
1. the whereabouts and the use of US$576 million raised by the Registrant
through the issuance of three convertible senior notes between 2006 and
2010 ("Notes Proceeds");
2. the operational and financial position of the following operating
companies of the Registrant in the People's Republic of China:
2.1 Beijing GP Medical Technologies Co., Ltd. ("Beijing GP");
2.2 Beijing Bio-Ekon Biotechnology Co., Ltd ("BBE"); and
2.3 Beijing Yuande Bio- Medical Engineering Co, Ltd. ("Yuande", collectively
with Beijing GP and BBE, the "PRC Subsidiaries"); and
3. the transfer of 60% equity interests of the PRC Subsidiaries to Beijing
Hezhong Shilade Technology Co ("Hezhong") and Beijing Yuanyide Trading Co,
Ltd ("Yuanyide", and together with Hezhong, the "Purchasers") on 9 February
2012 ("PRC Subsidiaries Transfers").
Significantly, the JOLs have not yet been able to meet with Mr Wu Xiaodong
("Mr Wu") (the Chairman, Chief Executive Officer and major shareholder of
the Registrant) in order to better understand the Key Issues. Although the
JOLs have had meetings at the PRC Subsidiaries in Beijing with Mr Han Jia
Ming ("Mr Han"), Ms Wang Zheng and Ms Yu regarding the Key Issues, such
individuals have not provided the JOLs with any meaningful or helpful
information to date. Mr Han, a close associate of Mr Wu, is one of the
current directors of the PRC Subsidiaries and one of the former directors
of the Registrant's subsidiaries in Hong Kong and the British Virgin
Islands. Ms Wang and Ms Yu serve as Yuande's internal legal counsel.
The JOLs will continue to work with Mr Han, Ms Wang, Ms Yu and others
still employed by the PRC Subsidiaries regarding the Key Issues, the
whereabouts of the books and records of the PRC Subsidiaries,
immediate access to Mr Wu and information pertaining to the Purchasers
Shareholders and Sam Tsang (each as explained in more detail below).
Mr. Samson Tak Yung Tsang ("Sam Tsang")
The JOLs' have also necessarily focused their investigation on Sam Tsang, an
individual critical to the Key Issues yet who disappeared in late 2011 and has
been unreachable since. Sam Tsang joined the Registrant in 2004 and was
substantially involved in the affairs of the Registrant. He had been
appointed to the following roles in the Registrant Group:
1. Chief Financial Officer of the Registrant between January 2005 and
December 2011;
2. director of the Registrant between June 2007 and December 2011;
3. director of the subsidiaries of the Registrant in BVI and Hong Kong
between January 2006 and December 2011; and
4. authorised signatory of the bank accounts of (at least) the Registrant's
subsidiaries in Hong Kong.
Sam Tsang resigned from the above roles in December 2011.
Given Sam Tsang's substantial involvement in the Registrant, the JOLs believe
that Sam Tsang has information in respect of the affairs of the Registrant
that is vital to the JOLs investigation of the Key Issues.
Since their appointment, the JOLs have unsuccessfully attempted to contact Sam
Tsang on multiple occasions to enlist his assistance, his last known mobile
phone number and electronic mail address are no longer valid. The JOLs will
continue to explore every avenue available to them in order to find Sam Tsang.
PRC Subsidiaries Transfers
The JOLs investigations reveal that the shareholders of the Purchasers of the
60% interest in the PRC Subsidiaries ("Purchasers Shareholders") are as
follows:
Purchasers Shareholders % of Equity Interest
Yuanyide Sun Xudong 40
Ai Fang 15
Wang Jinshuan 15
Lin Jing 15
Wan Yunzhe 15
Total 100
Hezhong Zhao Shumin 40
Sun Lei 20
Yang Huawei 20
Bao Yunluo 20
Total 100
The information available to the JOLs also indicates that the Purchasers
Shareholders have previously worked with Mr Wu at the PRC Subsidiaries
or at other companies owned by Mr Wu.
The JOLs have been trying to secure a meeting with the Purchasers and/or
the Purchasers Shareholders, but no reply has been received to date. The
JOLs have also asked Mr Han to arrange meetings with the Purchasers
Shareholders, but he claims that he has been unable to do so.
The JOLs' investigations also reveal that on 21 February 2012, Beijing
Jinpuxin Medical Technologies Co., Ltd ("Jinpuxin") was established by Ma
Shanshan who was the former legal representative of Beijing GP. Jinpuxin
is engaged in a business similar to that of Beijing GP and from the same
premises as Beijing GP. The JOLs investigations in this regard are continuing.
Chapter 15 Application
On 31 August 2012, the JOLs filed an application in the United States
Bankruptcy Court for the Southern District of New York ("the Bankruptcy Court")
for the recognition of the Registrant's Cayman Islands liquidation proceedings
(Court file number 12 1373) under Chapter 15 of the United States Bankruptcy
Code ("the Bankruptcy Code"). On 10 October 2012, the Honourable Judge
Robert E. Gerber ordered, inter alia, that:
1. the liquidation proceedings of China Medical in the Cayman Islands is
granted recognition as a foreign main proceedings pursuant to sections
1517(a) and (b)(1) of the Bankruptcy Code and all the effects of recognition
as set forth in section 1520 of the Bankruptcy Code shall apply;
2. the Liquidators are authorised to take all actions necessary to effectuate
the relief granted pursuant to the Order; and
3. the Bankruptcy Court shall retain jurisdiction in respect of the enforcement
of the Order.
Securities and Exchange Commission ("Commission")
On 12 October 2012, the Commission ordered, inter alia, the following:
1. a public administrative proceedings are instituted pursuant to section 12(j)
of the Securities Exchange Act of 1934 ("Exchange Act") against the Registrant
as a result of the failure of the compliance with section 13(a) of the Exchange
Act and Rule 13a-1 thereunder, while its securities were registered with
the Commission pursuant to section 12 of the Exchange Act, in that it
has not filed an Annual Report on Form 20F since 18 July 2011
("Administrative Proceedings"); and
2. the Registrant shall file an Answer within 20 days after the service of the
Order, as provided by Rule 220 of the Commission's Rules of Practice.
The JOLs are continuing their investigations in the affairs of the Registrant
and considering the legal remedies available to them in order to recover
the books and records of the PRC Subsidiaries and in respect of other
matters. Appropriate announcements will be made as and when there
are further developments.
Kenneth Krys
Joint Official Liquidator
China Medical Technologies Inc. (In Official Liquidation)
22 October 2012