The 13 Macau parent company says its business and subsidiaries are completely insolvent.
South Shore Holdings announced late last week that its organization has ceased operations, and its companies and holdings are bankrupt. In filings made with the Hong Kong Stock Exchange, South Shore informed investors that efforts to restructure the company’s ownership with its creditors and major shareholders were unsuccessful.
The Provisional Liquidators have been making efforts to have discussions with various parties to explore the possibility of a restructuring of the Group. As of the date of this announcement, no commitment and no formal agreement in respect of a potential restructuring of the Company has been reached or entered into by the Company,” the exchange filing detailed.
As a result, South Shore says it has no option but to initiate the insolvency process. That will primarily deal with how The 13’s assets, a resort that cost $1.6 billion to complete, are divvied up among those owed money.
The 13 Backstory
The 13 Macau was the grand vision of flamboyant Hong Kong businessman Stephen Chung. Amid the Chinese enclave reporting record gross gaming revenue (GGR) of $45 billion in 2013, Hung set out to create the region’s most luxurious VIP-focused boutique gaming resort.
But Hung wasn’t the only one who took notice of Macau casinos generating tens of billions of dollars in revenue and profits. China President Xi Jinping did, too.
Xi, was concerned with capital bleeding out from underneath the mainland’s heavily taxed control to the gaming tax haven. He directed law enforcement to better monitor junket groups that organize travel to the casino hub for China’s millionaires and billionaires.
The president’s direction resulted in a drastic cut in annual GGR. Macau casinos won less than $28 billion in 2016 — down 38 percent in just three years.
Macau’s six licensed commercial casinos, which have invested tens of billions of dollars building their integrated resorts in Macau and the Cotai Strip, engaged in a turf war for VIPs. The 13, a small 201-room hotel located a mile south of the Strip’s most southern end, opened in the fall of 2018. That’s two years after it was originally scheduled to welcome its first guests.
By then, China’s major gamblers had found their high-end casino of choice, and The 13 failed to lure the high-end clientele it was built for.
Company Nearing Termination
The 13 Macau closed its hotel in February of 2020 because of the pandemic. It never reopened. Trading of South Shore shares have been suspended since late June of this year. That’s when the company hinted that it was approaching insolvency.
South Shore says the dissolution of the group will be completed in the coming months.
The main insolvency procedure in China is liquidation, which is set out in a special chapter of the Enterprise Bankruptcy Law,” explains Xiuchao Yin and Zhiguo Yang, both partners of the international law firm Dentons.
“The objective is to properly value and distribute the residual value of the debtor’s assets to its creditors and shareholders,” the two China-based attorneys added.