ShengdaTech, Inc. (fka SDTHQ)

[doriangrey]

As you can clearly see the actual court filing prove you wrong, yet again Shorty.

BACKGROUND
A. Background and Operations
7. On August 19, 2011 (the “Petition Date”), the Debtor commenced this Chapter 11
Case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code.
8. The Debtor has continued in possession of its property and is operating and
managing its business as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the
Bankruptcy Code.
9. On August 31, 2011, the Office of the United States Trustee appointed the
Committee in the Chapter 11 Case. On October 27, 2011, the U.S. Trustee filed the Amended
Notice of Appointment of Committee of Unsecured Creditors [Docket No. 213].
10. The Debtor is a Nevada corporation with its principal place of business in the PRC.
On March 31, 2006, the Debtor consummated a share exchange pursuant to a Securities Purchase
Agreement and Plan of Reorganization with Faith Bloom, which remains the Debtor’s wholly
owned subsidiary. Faith Bloom is the direct parent company of the following entities formed under
the laws of the PRC: Shandong Haize Nanomaterials Co., Ltd., Shandong Bangsheng Chemical Co.,
Ltd., Shaanxi Haize Nanomaterials Co., Ltd., Zibo Jiaze Nanomaterials Co., Ltd. and Anhui
Yuanzhong Nanomaterials Co., Ltd. (collectively, the “PRC Subsidiaries”).
11. Other than Shandong Bangsheng Chemical Co., Ltd., which, upon information and
belief is not an operating entity, all of the other PRC Subsidiaries are operating entities (the “PRC
Operating Subsidiaries”). The PRC Operating Subsidiaries manufacture a specialty additive known
as nano-precipitated calcium carbonate, which is used in a variety of products to enhance their
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CHI 62,077,194v3 2-16-12 5 Greenberg Traurig, LLP
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durability and efficiency and is widely applied in the paint, paper, plastic and rubber industries and
used for building materials such as PVC. Neither the Debtor nor Faith Bloom are operating entities.
12. The events giving rise to the Chapter 11 Case are described in detail in the
Declaration of Sheldon B. Saidman in Support of Debtor's First Day Motions [Docket No. 16]
which is incorporated herein by reference.
13. On August 19, 2011, the Special Committee of the Board of Directors of the Debtor
(the “Special Committee”) appointed Michael Kang of Alvarez & Marsal (“A&M”) as the chief
restructuring officer (“CRO”) of the Debtor. On September 2, 2011, the Court entered a final order
confirming Mr. Kang’s appointment as CRO.
B. The Chapter 11 Case
14. Since the commencement of the Chapter 11 Case, the Debtor has taken steps to
maintain control of its business and secure its assets. Moreover, the Debtor had to take certain steps
to stabilize control of the Debtor and Faith Bloom.
15. On September 2, 2011, the Court granted the Debtor’s request for a preliminary
injunction and enjoined the Debtor’s board of directors and shareholders from taking any action to
change the composition of the Special Committee or the appointment of the CRO or to interfere
with the Special Committee or other actions conducted by the Special Committee and CRO.
[Docket No. 27, Case No. 11-05082 (Bankr. D. Nev. Sept. 2, 2011)].
16. On October 7, 2011, the Debtor filed its motion for entry of an order pursuant to
section 105(a) of the Bankruptcy Code, Rules 2004 and 9016 of the Federal Rules of Bankruptcy
Procedure (the “Bankruptcy Rules”) and Rules 2004, 5075(a)(2)(L) and 9006 of the Nevada Local
Rules of Bankruptcy Practice (the “Local Rules”), authorizing the Debtor to serve subpoenas upon
certain Banks2 (the “2004 Motion”). [Docket No. 157]. As detailed in the 2004 Motion, the Special
Committee’s professionals attempted to visit certain of the Banks in the PRC that maintain the PRC
2 The “Banks” that are the subject of the 2004 Motion are (i) the Bank of China; (ii) the Industrial and Commercial
Bank of China; (iii) the Bank of Communications; (iv) China Merchants Bank; and (v) the Agricultural Bank of China.
On information and belief, prior to the Petition Date, Faith Bloom and/or the PRC Operating Subsidiaries maintained
accounts with each of the Banks (the “Bank Accounts”).
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Subsidiaries’ accounts in order to obtain information relating to the primary Bank Accounts. While
visiting the Banks, the Special Committee’s professionals received no cooperation from the legal
representatives and the local branches for these Banks in the PRC. As a result, the Debtor filed the
2004 Motion to seek information relating to the Bank Accounts, which is critical for the Debtor to
safeguard its assets, restructure its business operations and allow the Debtor to continue its ongoing
investigation of the financial affairs of the Debtor.3 While the Debtor has attempted to reach an
agreement with the Banks as to the delivery of certain information, the Debtor anticipates that it will
have to commence litigation to enforce the 2004 subpoenas.
17. The Debtor has spent significant time with the Committee and its attorneys
developing the strategic plans in the PRC and ensuring that the Committee and its attorneys are
supportive of these efforts.
18. Following commencement of this Chapter 11 Case, the Debtor sent letters to the
former legal representatives of each PRC Subsidiary, requesting that they deliver the chops and
business licenses for each PRC Subsidiary to the Debtor, which are necessary to demonstrate legal
control of an entity in China, and has informed each of the former legal representatives that they
should take no action without the approval of A. Carl Mudd, Sheldon B. Saidman or Michael Kang,
who comprise the officers and directors of Faith Bloom. The former legal representatives for the
PRC Subsidiaries have yet to comply with these requests.
19. Following commencement of this Chapter 11 Case, the Debtor sent letters to certain
governmental agencies in the PRC informing them of the newly appointed officers and directors for
Faith Bloom and informing these agencies of certain disputes concerning ownership and control of
the PRC subsidiaries.
20. Faith Bloom has engaged certain professionals in the PRC to assist in further
implementing its strategy in the PRC to safeguard and recover the PRC Subsidiaries and other
assets in the PRC. Specifically, Faith Bloom has replaced all of the legal representatives, officers
3 The Debtor’s professionals also attempted to “freeze” certain of the bank accounts held by Faith Bloom.
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CHI 62,077,194v3 2-16-12 7 Greenberg Traurig, LLP
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and managers of the PRC Subsidiaries. In addition, Faith Bloom has commenced litigation in the
PRC to obtain the chops, business licenses and other corporate property being held by the former
legal representatives, former managers and/or former officers of the PRC Subsidiaries.
21. The Debtor has also engaged a law firm in the British Virgin Islands to assist it with
certain corporate governance and other issues relating to Faith Bloom. Since the filing of this
Chapter 11 Case, the Debtor has removed and replaced all officers and directors at Faith Bloom and
despite resistance from the Debtor’s former management, was able to obtain recognition of the new
officers and directors by the Registered Agent in the British Virgin Islands. As noted above, the
Debtors have obtained control of all known Faith Bloom bank accounts.
C. Reorganization Efforts
22. Since the Petition Date, the Debtor has been focused on tracing and securing its
assets and the assets of Faith Bloom and the PRC Subsidiaries. These efforts are complicated by
the fact that many of the PRC Subsidiaries’ assets are maintained in the PRC and parties in the PRC
have been unwilling to assist the Debtor or its professionals.
23. In spite of these obstacles, the Debtor has made progress with its reorganization
efforts. Since the filing of the Chapter 11 Case, the Debtor has initiated a multi-fronted campaign to
obtain visibility into and control over the PRC Subsidiaries which, upon information and belief,
hold the assets potentially available for distribution to the creditors of the Debtor’s estate.
24. The Debtor and its advisors have made progress in gathering documents informally
from third party sources. Moreover, the Debtor and its advisors have gained insights into the PRC
Subsidiaries through informal interviews of prior employees.
25. On November 16, 2011, the Debtor filed its first motion seeking to extend the
Exclusive Periods [Docket No. 249] (the “First Exclusivity Motion”). An order granting the First
Exclusivity Motion was entered on December 19, 2011 [Docket No. 285]. The Exclusive Periods
currently expire on March 19, 2012 and June 14, 2012 respectively.
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CHI 62,077,194v3 2-16-12 8 Greenberg Traurig, LLP
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Las Vegas, Nevada 89169
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D. Summary
26. Since the filing of the First Exclusivity Motion, the Debtor and its advisors have
continued to focus on activities that are critically important to the Debtor’s reorganization,
including assisting the Special Committee in its ongoing investigation of the Debtor’s prepetition
financial affairs, commencing litigation in the PRC in furtherance of the Debtor’s strategy to take
control of the PRC Subsidiaries and their assets, further responding to the subpoena issued by the
SEC, and taking further steps to preserve the Debtor’s assets.


UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA
In re:
SHENGDATECH, INC.,
Debtor.
Case No. BK-11-52649
Chapter 11
ORDER PURSUANT TO 11 U.S.C. §
1121(d) FURTHER EXTENDING THE
EXCLUSIVE PERIODS WITHIN WHICH
TO FILE A CHAPTER 11 PLAN AND
SOLICIT VOTES ON SUCH PLAN
Hearing Date: March 15, 2012
Hearing Time: 2:00 p.m.
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CHI 62,077,194v3 2-16-12 2
Upon the second motion (the “Motion”)1 of ShengdaTech, Inc. (the “Debtor”), as debtor and
debtor-in-possession in the above-captioned chapter 11 case (the “Chapter 11 Case”), for entry of an
order, pursuant to section 1121(d) of title 11 of the United States Code (the “Bankruptcy Code”),
further extending the periods during which the Debtor has the exclusive right to file a Chapter 11 plan
and solicit votes on such plan (the “Exclusive Periods”); and the Court having jurisdiction to consider
the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334; and this being a
core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (O); and venue being proper before this
Court pursuant to 28 U.S.C. § 1408; and it appearing that notice of the Motion was good and
sufficient under the circumstances and that no other or further notice be given; the Court having the
authority to grant the relief requested and such relief is just; and the Court having found that the relief
requested in the Motion is in the best interests of the Debtor, its creditors and all parties in interest,
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. The Motion is GRANTED.
2. The period during which the Debtor shall have the exclusive right to file a
Chapter 11 plan is extended to and including June 18, 2012.
3. The period during which the Debtor shall have the exclusive right to solicit
votes to accept such plan is extended to and including September 12, 2012.
4. This Order is without prejudice to the Debtor’s ability to seek further extension
of the Exclusive Periods, subject to the requirements of the Bankruptcy Code.
5. The Debtor is authorized to take all actions necessary to effectuate the relief
granted pursuant to this Order in accordance with the Motion.
6. The terms and conditions of this Order shall be immediately effective and
enforceable upon its entry.
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