China Natural Gas involuntary bankruptcy approved in light of consent

By Caroline Salls

Pittsburgh, July 9 - China Natural Gas, Inc.'s involuntary Chapter 11 bankruptcy was approved by the U.S. Bankruptcy Court for the Southern District of New York on Tuesday, according to a court filing.

Last month, the company consented to the involuntary bankruptcy case filed against it on Feb. 8 by creditors Abax Lotus Ltd., Abax Nai Xin A Ltd. and Lake Street Fund LP.

The petitioners claim that they are owed $42.22 million as a result of China Natural's failure to make payments on its 5% guaranteed senior notes issued in 2008.

The noteholders informed the company on Sept. 5, 2012 that they had exercised their right to accelerate the notes as a result of the continued default, with a total of RMB 249.45 million being accelerated.

The company also received a demand notice on Sept. 10, 2012 demanding payment of all amounts owed within 15 days. If China Natural failed to meet the demand, the notice said, lawsuits and involuntary bankruptcy cases could be filed, and the noteholders could require redemption of all warrants.

In addition to those demands, the noteholders claim that the default requires the company to redeem the warrants and pay the noteholders $17.5 million.

China Natural Gas filed two motions for dismissal of the involuntary case earlier this year before consenting to an order of relief in response to the petition.

Based in Xi'an, China, China Natural Gas is a provider of pipeline natural gas for industrial, commercial and residential use and compressed natural gas for vehicular fuel. The Chapter 11 case number is 13-10419.

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