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Case Key Risks Base Case Scenario FYT Actions/Initiatives Client's FYT's FYT's Value-A Purchase Recovery Value-Add dded Price ed Ratio 2 1. The borrower held 45% equity The client would receive With its accurate market 7,174,184 11,000,000 3,825,816 53.33% in a JV, which has been only RMB2.85 mm on a intelligence and strong local foreclosed by other competitive pro rata basis based upon connections, FYT responded fast creditors; the borrower's total enough to successfully foreclosed 2. At the meantime of FYT's liabilities in case of the the borrower's equity in the JV and negotiation with the borrower, the borrower's bankruptcy. realize a satisfactory recovery borrower's parent company during the interim period of one planned to initiate the borrower's week between the expiry of other bankruptcy and take back the creditors' foreclosure and the equity by itself; bankruptcy of the borrower. 3. The borrower was already listed in the bankruptcy scheme approved by government and the bankruptcy process would be started soon. 3 Closing documents from the The client's recovery With its accurate market 667,562 3,000,000 2,332,438 349.40% seller indicated that the borrower would be very low as intelligence and strong local did not have any valuable asset. there is no value in the connections, FYT had access to an borrower. internal document from the borrower's parent company. According to the document, a piece of land would be refunded to the borrower from a JV which the borrower had set up before. FYT successfully foreclosed the land one day before the borrower's sale of the land. Case Key Risks Base Case Scenario FYT Actions/Initiatives Client's FYT's FYT's Value-A Purchase Recovery Value-Add dded Price ed Ratio 4 The borrower's parent company The client would receive With its accurate market 2,205,625 11,000,000 8,794,375 398.72% planned to initiate the borrower's only RMB0.92mm on a intelligence and strong local bankruptcy. pro rata basis based upon connections, FYT responded fast the borrower's total enough to identify a piece of land liabilities in case of the of the borrower which has been borrower's bankruptcy. approved to be used for residential development. FYT initiated the auction of the land to the highest bidder and realize a satisfactory recovery before the bankruptcy of the borrower. Case Key Risks Base Case Scenario FYT Actions/Initiatives Client's FYT's FYT's Value-A Purchase Recovery Value-Add dded Price ed Ratio 5 Closing documents from the The client's mortgage Through its strong local 9,452,680 seller indicated that the mortgage rights with regard to the connections, FYT successfully contract with regard to the collaterals will not be foreclosed the property before collateral is missing although supported by the court other creditors renewed their there is an other right certificate. without a relevant foreclosure on the property and Without the presentation of mortgage contract. found out the mortgage contract to mortgage contract, our client's Consequently, the client's support its client's mortgage rights rights with regard to the collateral recovery could be very with regard to the collateral. will not be supported by the court low. while the collaterals have been foreclosed by other creditors. 6 The beneficiary in the other right The client's mortgage FYT successfully foreclosed the 8,664,957 35,153,935 17,036,298 94.03% certificate is different from that in interests would not be borrower's properties before other the mortgage contract available. supported by the court creditors apply for court However, no documents showed while other creditors had enforcement against such that the mortgage contract had won litigation against the properties; with new evidences, been extended; The different borrower in legal balance FYT eventually persuaded the beneficiaries represented two of RMB136 mm. This court to rule that the mortgage different bank branches. would significantly affect shall be legally valid. the client's recovery. Case Key Risks Base Case Scenario FYT Actions/Initiatives Client's FYT's FYT's Value-A Purchase Recovery Value-Add dded Price ed Ratio 7 Closing documents indicated that The client's recovery With its accurate market 80 7,433,859 7,433,779 9292223.75 the borrower has not valuable would be very low intelligence and local connections, % assets. because the borrower had FYT successfully identified and no asset. auctioned the borrower’s assets including land of 35,671.32 m2 in site area and buildings of 400 m2 in GFA and loans of RMB 6, 894,831.3 owed by other parties to the borrower. 8 1. Both the borrower and the 1. Without valid court 1. FYT actively communicated 12,276,681 15,117,000 2,840,319 23.14% mortgagor have gone bankrupt. A judgment confirming the with the liquidation committee and liquidation committee has taken loans of the client, the timely registered the client's over all the fixed assets of the client's rights against both creditor's rights and mortgage borrower and the mortgagor. the borrower and the rights by showing all loan and 2. Both the borrower and the mortgagor may not be mortgage files to the liquidation mortgagor still owed hundreds of accepted by the committee without any effective millions RMB to tens other liquidation committee. court judgment. creditors. 2. FYT actively communicated 3. The client has not yet initiated with a court and obtained the any litigation while other court's confirmation of the client's creditors have already won their loan and mortgage rights by way litigations pending enforcement. of a simpler document rather than a formal court judgment. 3. Compete with tens other creditors and safeguard the client's legal rights. Case Key Risks Base Case Scenario FYT Actions/Initiatives Client's FYT's FYT's Value-A Purchase Recovery Value-Add dded Price ed Ratio 9 1. The borrower was a private In case of court FYT proposed a settlement plan to 61,812 700,000 638,188 1032.47% company restructured from a enforcement against the the borrower that the borrower former SOE. collaterals, the client will should borrow money from its 2. The borrower is losing in its be able to recover a low shareholders to repay the loan. In operation and thus has no ability value from the return for that, FYT agreed to a to repay the loan. collateralized machines. 6-month installment payment 3. Collaterals included 2 aged In case of the borrower's schedule with the upfront payment printing machines, the fair market bankruptcy following the of RMB200, 000 which is 3 times value of which was 1/5 of the disposition of the of the client's purchase price. OPB. machines, the client would have to face the competition from other creditors and share the auction proceeds of the machines with other creditors. 10 1. As a huge SOE, the borrower With intervention from the With accurate market intelligence, 7,221,155 10,109,617 2,888,462 40.00% has strong support from by the local government, the FYT managed to sell the loan to a local government. local court refused to help local investor, who claimed to 2. The local government directly the client to enforce have strong connections with the instructed that the local court against the borrower and local government. should not enforce any litigation then no recovery shall be against the borrower. possible from the 3. Both the former lending bank borrower directly. and AMC failed to recover anything from the borrower due to intervention from the local government. Case Key Risks Base Case Scenario FYT Actions/Initiatives Client's FYT's FYT's Value-A Purchase Recovery Value-Add dded Price ed Ratio 11 1. As a huge SOE, the borrower The client has no clear 1. With its local market 22,747,243 27,017,250 4,270,000 18.77% has strong support from the local idea on the disposition of intelligence, FYT found out that government. this asset during its the borrower had made a loan of 2. The loan is not secured by any underwriting. RMB30 mm to a 3rd party. property or fixed asset. 2. FYT managed to work out a 3. The borrower is losing in its settlement plan with the borrower operation and thus has no ability that the borrower should pay to repay the loan. RMB9.5 mm through installment 4. Total OPB is RMB23, 000,000 payments and also transfer its while the client’s purchase price 3rd-party loan of RMB30 mm to amounts to RMB22, 747,243. It the client as a settlement. seems difficult for the client to 3. FYT eventually helped the make money from this asset. client to recover another RMB17.5 mm from the 3rd party for the loan of RMB30 mm.
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