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Banks vow to take legal action against Rebar firms

Creditor banks led by Mega Inter-national Commercial Bank (兆豐國際商銀) yesterday said they had decided to seek legal means to oppose a restructuring plan by two subsidiaries of the scandal-embroiled Rebar Asia Pacific Group (力霸亞太企業集團).

The decision was made after China Rebar Co (中國力霸) and Chia Hsin Food & Synthetic Fiber Co (嘉新食品化纖) failed to withdraw their restructuring applications filed to the Taipei District Court within the one-week deadline given by the creditor banks.

During the second meeting convened by Mega International yesterday, executives of China Rebar and Chia Hsin were invited to explain why their firms refused to cooperate with the banks' demand. China Hsin's representatives failed to turn up.

"China Rebar's high-level official said they have their own concerns. But we cannot accept their excuse and have therefore decided to seek legal means to safeguard our rights and interests," said Yen Shen-chun (嚴盛俊), vice president of Mega International, during a telephone interview.

Yen said the banks had reached a consensus that they would file a petition opposing the two Rebar subsidiaries' restructuring proposal.

Mega International will also issue legal documents on behalf of the creditor banks to relevant authorities and the court to voice their opposition to the two Rebar firms' move.

The banks are worried that the drawn-out restructuring procedure would prolong loan repayments and force them to classify the two firms' debts as loan defaults.

This would negatively impact on the banks' earnings, they said.

As of last September, China Rebar and Chia Hsin had accumulated debts of NT$40.6 billion (US$1.24 billion) and losses of NT$25.31 billion in the past seven years. Mega International alone has financed NT$6.23 billion of their debts, making it their largest creditor.
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