The liquidation of Chinese dairy firm Hunan Taizinai, once a darling of Wall Street, has been complicated by the efforts of the firm’s chairman to hold on to the company, Reuters reported, citing a source familiar with the proceedings. Taizinai, which is registered in the Cayman Islands, was backed by Morgan Stanley (MS.NYSE), Goldman Sachs (GS.NYSE) and prvate equity firm Actis capital to the tune of US$73 million in 2007, for which they received a 30% stake in the company. The company expanded quickly and was considered for an IPO, but it was hit hard by the tainted-milk scandal of 2008. Even though it was not charged with selling contaminated products, the scandal left it mired in debt. The source said that Taizinai could have as much as US$440 million in unpaid debt to creditors like Citibank (C.NYSE) and Singapore’s DBS (DBSM.SI). Taizinai’s operations have been taken over by the Hunan government, and liquidators are trying to carve out a framework for an agreement between Taizinai and its creditors.
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