Sino Forest, the Chinese Forestry company plagued by accusations of overstating its assets, intends to file for bankruptcy and is to sue research group Muddy Waters for $4bn in damages over the claims of fraud that preceded its failure.
The group announced yesterday that it is initiating proceedings under the Companies Creditors Arrangement Act, the Canadian equivalent of a Chapter 11 bankruptcy filing, after agreeing to transfer ownership of the company to its lenders.
In January, Sino Forest avoided default on $1.8bn of bonds when creditors waived their right to force the company into bankruptcy in return for a small cash payment and a series of commitments from the company’s management. The waiver was due to expire at the end of April.
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