Court helps software maker avoid bankruptcy
By Xu Fang |
March 23, 2011, Wednesday
|
Print Edition
Print Edition
A SOFTWARE company has avoided bankruptcy after a court in Shanghai helped mediate the country's first currency swap contract lawsuit yesterday.
The firm agreed to do its best to pay penalties while the bank agreed to reduce its compensation request, Pudong New Area People's Court said yesterday.
"A company with good potential is saved and the bank can have part of its creditor's rights fulfilled. It's a win-win result," said Chen Meng, chief judge in the case.
The unidentified software company used to have several contracts with Japanese firms and received payment in yen.
To exchange yen for US dollars, the software firm signed a four-year currency swap deal with a Japanese bank in 2006 to avoid risk from exchange rate fluctuations.
The bank later transferred the contract to its local branch. The firm then agreed to a three-year currency swap contract with the branch in 2007. It stated the firm should exchange 15 million yen for US$133,333 every month.
During the financial crisis the software firm lost most of its Japanese business. From November 2008 it no longer had enough yen to continue with the currency swaps. The bank sued in April 2010.
Under court mediation, the software firm agreed to pay 180,000 yuan in cash and transfer its creditor's right in a company valued at 1.85 million yuan to the bank.
The firm agreed to do its best to pay penalties while the bank agreed to reduce its compensation request, Pudong New Area People's Court said yesterday.
"A company with good potential is saved and the bank can have part of its creditor's rights fulfilled. It's a win-win result," said Chen Meng, chief judge in the case.
The unidentified software company used to have several contracts with Japanese firms and received payment in yen.
To exchange yen for US dollars, the software firm signed a four-year currency swap deal with a Japanese bank in 2006 to avoid risk from exchange rate fluctuations.
The bank later transferred the contract to its local branch. The firm then agreed to a three-year currency swap contract with the branch in 2007. It stated the firm should exchange 15 million yen for US$133,333 every month.
During the financial crisis the software firm lost most of its Japanese business. From November 2008 it no longer had enough yen to continue with the currency swaps. The bank sued in April 2010.
Under court mediation, the software firm agreed to pay 180,000 yuan in cash and transfer its creditor's right in a company valued at 1.85 million yuan to the bank.
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