On February 6, 2013, Jade Cargo

International Airlines, the first Sino-foreign cargo airline company, filed for

bankruptcy with Shenzhen Intermediate People's Court. Since October 26, 2015,

the bankruptcy administrator of Jade Airlines has auctioned three self-owned

Boeing 747 cargo airplanes offline on six different occasions, but all had

failed. On September 19, 2017, the three airplanes were placed on online

judicial auction platform operated by Alibaba with the court's approval. This

is the first time that a bankruptcy estate has been auctioned online in

accordance with rules promulgated by the Supreme People's Court of China with

respect to online judicial auction.

Aircraft is typically an asset with international mobility. However,

the online auction process of www.taobao.com has not fully taken into

consideration the needs of foreign participants in the auction of aforesaid

aircrafts, whether in relation to their opening of Taobao and Alipay accounts,

their payment of auction deposit, or in relation to their registration as

bidders. In addition, the State Administration of Foreign Exchange (“SAFE”)

generally prohibits domestic entities from receiving foreign currencies aboard as

bid deposit. These deficiencies of the online auction platform, together with

the restrictions imposed by SAFE, make it nearly impossible for foreign buyers

to register for the online judicial auction and pay the auction deposit.

In the said online auction, the JunHe team led by partner Mr. Zhenfeng

Yan represented a foreign client. After numerous communications and effective

coordination and explanations by our team with all concerned parties and

government authorities, our client was eventually permitted to pay the auction

deposit offline with US Dollars, and to open Taobao, Alipay, bank and cellphone

accounts, which allowed the foreign client to complete the bidder registration

process two days before the deadline.

In addition, aircraft inspection,

typically including document review, technical inspection, and test flight, is very

critical for the purchaser in used aircraft transactions. The original auction

announcement only allowed the bidder to walk around the auction object for

visual inspection. To make the technical inspection possible for our client,

Mr. Zhenfeng Yan submitted a written application to Shenzhen Intermediate

People's Court, and flew from Shanghai to Shenzhen together with the foreign

client to elaborate the importance and necessity of aircraft inspection. The

court and the bankruptcy administrator, after having been convinced, finally

approved our application for aircraft inspection, and this actually benefitted

all bidders in the auction process.

JunHe has been greatly appreciated by the

client, as with our expertise and professional service, it was enabled to

participate into the first ever online auction in Chinese bankruptcy

proceedings, to inspect the aircraft before the auction, and ultimately has

acquired one Boeing 747 aircraft.

JunHe will continue to serve

manufacturers, airlines, suppliers, leasing companies, banks, MROs and other

players in aviation industry with its proven expertise.

The leading partner of this project was Mr. Zhenfeng Yan.