I have a preliminary question to plan a litigation strategy taking place in China and the US.
Company A, a Chinese company and the client in this question, has established a China-based joint venture
(JV) with Company B, another Chinese company, each holding 40% and 60% shares in the JV respectively. Company A has fully paid its capital
commitment to the JV, Company B has only paid half of its capital commitment and the other half has already due and remains outstanding.
Under Chinese law and relevant contracts
, Company A and the JV have a right to claim for the unpaid capital commitment against Company B. Company A has provided a shareholder
loan equal to about US$5 million to the JV (Shareholder Loan), which became due and payable in 2015. Due to lack of cash, the JV is not capable of repaying the Shareholder Loan to Company A, enabling Company A to claim for repayment of the Shareholder Loan against the JV under Chinese law.
Company A would like to commence proceedings against the JV and Company B, however, the only valuable asset owned by the JV is a fully owned Texas subsidiary
(Texas Subsidiary). The market value of which is US$5 million.
Company A would like to file a claim against Company B in China for the outstanding obligations related to the capital commitment. Company A's primary concern is whether it may also file for an injunction in US courts or other interim measure to prevent unauthorized disposal or enforcement of the shares of the Texas Subsidiary by Company B or the creditors of the JV or the Texas Subsidiary. It is known that currently there is no encumbrance placed on the shares of the Texas Subsidiary.