Sino-Forest creditor protection extended to June 1

Fri Apr 13, 2012 4:04pm EDT
 

By Euan Rocha

TORONTO (Reuters) - A Canadian court on Friday extended a creditor protection order for Sino-Forest Corp by five weeks to June 1, giving the embattled Chinese forestry company more time to move forward with asset sales.

Justice Geoffrey Morawetz of the Ontario Superior Court declined the Toronto-listed company's request for an extension until July 9, but agreed to leave the order in place for about a month beyond its initial April 29 expiration.

Sino-Forest, accused of fraudulently exaggerating the size of its forestry assets, says the allegations have paralyzed its business.

"I am satisfied that the applicant is working in good faith," said Morawetz, adding that the court would consider a further extension after it weighs other motions, including those in a related shareholder lawsuit.

Sino-Forest's shares tumbled last June after short-seller Carson Block and his firm Muddy Waters accused the company of swindling investors. Sino-Forest is now battling several lawsuits, on top of investigations by regulators and law enforcement authorities.

The company's stock, halted for months, is being delisted by the Toronto Stock Exchange in the wake of the bankruptcy protection proceedings.

Sino-Forest's lawyers said in court the company had started putting its assets up for sale and that the extension of the stay period would provide stability to Sino-Forest's business while it works through the sale process.

Sino-Forest said the initial phase of the sale process involves soliciting nonbinding letters of intent from potential bidders. This phase is expected to be completed by June 28.   Continued...

 
The company logo of Sino-Forest is displayed at the entrance of its office in Hong Kong June 8, 2011. REUTERS/Xavier Ng