Sino-Forest recoveries likely to be low, reports Financial Times

It could take bond holders years to get their hands on any of Sino Forest’s Chinese assets if they force the company into bankruptcy, according to an article in the Financial Times today. The forestry company’s debt was issued by entities in Hong Kong and Canada, which have efficient legal systems, notes the article. But in China, where the timber supposedly lies, recovery would depend upon the cooperation of employees and local authorities. “The bond holders won’t want a liquidation on their hands,” an unnamed source is quoted as saying.

Sino-Forest missed a coupon payment on its bonds yesterday and, as the FT reports, bondholders are likely to face heavy losses on the notes.