BIOSTAR PHARM-B (02563) announced that as of the date of this announcement, its wholly-owned subsidiary, Biostar Pharma, Inc. (US-Biostar), subscribed to $5 million in the LFM Stable Income Fund SP, a segregated portfolio of LFM Oversea Investment Fund SPC, on November 29, 2024, using its idle funds. The fund is an exempted company registered under Cayman Islands law and structured as a segregated portfolio company. LFM Fund's manager is an independent third party with no affiliation to the company or its related parties. The subscription was completed on November 28, 2024, with the investment set to mature on November 29, 2025. The company submitted a redemption request on January 21, 2025.
According to the LFM Fund manager, the fund had previously subscribed to $5 million in notes issued by Global Peace International Limited (Global Peace), maturing in March 2026, and had already transferred the corresponding funds to Global Peace. As of this announcement, the investment remains unredeemable as these funds have not been recovered from Global Peace. The company has repeatedly communicated with LFM Fund regarding early redemption and formally submitted redemption requests, but these applications have not been promptly addressed.
In response, the company intends to pursue legal action to expedite the redemption process. In May 2025, it appointed Conyers Dill & Pearman LLP as legal counsel to initiate winding-up and receivership proceedings against LFM Fund under Cayman Islands law. On September 12, 2025, the legal counsel filed a petition with the Grand Court of the Cayman Islands (Financial Services Division) under Section 224 of the Companies Act (2025 Revision), seeking the appointment of a receiver for LFM Stable Income Fund SP. Notices regarding the receivership proceedings were published in the Cayman Islands, Hong Kong, and mainland China on November 5, 2025.
The receivership application for LFM Fund was heard on November 19, 2025, in the Cayman Islands. The court is expected to rule within two weeks on whether a court-appointed receiver should liquidate LFM Fund. If a receiver is appointed, the existing management or general partner will no longer control the fund. US-Biostar, as a redeeming investor, will formally become a creditor of LFM Fund, and the receiver will liquidate the fund's assets to settle the redemption amount owed to US-Biostar.
Additionally, on November 21, 2025, the company's legal counsel issued a statutory demand for debt repayment to LFM Oversea Investment Limited, the sole shareholder of LFM Fund's manager, demanding that it assume joint and several liability for LFM Fund's redemption obligations under the subscription agreement and commitment letter.
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