The board of directors resolved its subsidiary Fruitage voluntary negotiates the subordinated claims against APDI to get the maximum distributable claims.

 The board of directors resolved its subsidiary
Fruitage voluntary negotiates the subordinated claims
against APDI to get the maximum distributable claims.

1.Date of occurrence of the event:2022/01/24
2.Company name:Fruitage International Co., Ltd.(hereafter referred
 to as ��Fruitage��)
3.Relationship to the Company (please enter ��head office�� or
  ��subsidiaries��):subsidiaries
4.Reciprocal shareholding ratios:100%
5.Cause of occurrence:
1)According to the understanding of US lawyers, APDI Liquidation LLC.
  (formerly known as Automotive Parts Distribution International LLC.
  hereinafter referred to as APDI), a subsidiary of the Company in the
  reorganization process, currently has total assets of approximately
  US$1 million to US$1.5 million and liabilities of approximately US$29
  million, of which USD 24 million is an account payable to Fruitage.
  APDI's current liquidation plan classifies the Fruitage claim as an
  insider claim and reserves the right of action.
2)According to the experience of American lawyers, since Fruitage is
  a shareholder of APDI and is the largest single creditor of APDI,
  if Fruitage's creditor's rights are allowed to participate in the
  distribution in full, other creditors will hardly be able to pay,
  so the U.S. Bankruptcy Court is likely to rule that Fruitage's
  creditor's right is subordination based on the principle of equity.
  Since APDI does not have enough assets to pay off all its
  liabilities, the so-called subordination is actually a waiver.
3)If Fruitage doesn't try to negotiate subordination, there may be
  litigation disputes, Fruitage will have to spend a lot of
  litigation-related costs; APDI will also pay high lawyer fees,
  plus the continuing costs incurred during the litigation process,
  it will lead to a significant reduction in APDI's assets regardless
  of whether Fruitage wins the lawsuit in the future; furthermore, it
  may not be possible to obtain a favorable ruling for Fruitage.
4) Based on the American lawyers experiences, the lawyer suggest
  Fruitage seek to negotiate the subordination of up to 50%.
6.Countermeasures:After referring to the opinions of American lawyers,
 the board of directors of the company passed a resolution on January
 24, 2022 to authorize the chairman of Fruitage to entrust lawyers to
 negotiate with APDI within the range of up to 50% of the subordinated
 claims.
7.Any other matters that need to be specified:None