Tabacalera acts to enforce Chen Zhi exit

Tabacalera has filed for pre-bankruptcy proceedings in Madrid’s Commercial Court No. 8 (Spain) as the start of a maneuver to force the departure of Chen Zhi, the company’s current majority shareholder, through the investment fund Allied Cigar Corp. The company wants more time to negotiate how to sever ties with Zhi, as its problem is not financial. Tabacalera has healthy accounts and is perfectly capitalized with working capital and liquidity to meet any debt claims, but after Chen Zhi’s arrest in January, accused of multiple crimes, and his extradition to China, and the subsequent blockade by the United States and the United Kingdom of all transactions related to the Chinese businessman, it has been forced to react to guarantee its viability in the short and medium term.

Sources within the company’s communications team assert that the pre-bankruptcy filing is “a preventative measure to ensure operational continuity and provide an additional safety framework,” submitted voluntarily to “protect against the effects of sanctions imposed by US and UK authorities on Chen Zhi’s business associates.”

According to a report published by the Spanish newspaper “El Confidencial,” citing company sources, “since October 2025, Tabacalera has been affected by a situation entirely external to the management of its executives and the company, stemming from the sanctions imposed by US and UK authorities on Chen Zhi’s business associates.” These same sources maintain that “neither Tabacalera’s board of directors nor its management team were aware of the accusations against Chen Zhi.”

The pre-bankruptcy proceedings, therefore, are the first step toward resolving the disruption to its operations in these two markets and are the result of an analysis conducted by Tabacalera seeking “all the tools provided for in current legislation, with the sole objective of guaranteeing business continuity, protecting jobs, and restoring normal operations.”

Liquidating the Fund

On February 18, Judge Marta García Fernández, presiding over the Madrid court, accepted the appointment of an expert entity, Teneo, with the aim of extending the pre-bankruptcy proceedings until Chen Zhi’s definitive disassociation as a shareholder of the company is achieved, in accordance with current law. At the time of filing for pre-bankruptcy, Tabacalera was exploring various legal avenues to protect its operations. Tabacalera now has a three-month period, which can be extended, to find this solution.

Meanwhile, the Eastern Caribbean Supreme Court has appointed Interpath, a company tasked with liquidating several entities located in the British Virgin Islands, including the shell company through which Zhi holds his stake in Allied. This could involve facilitating the sale of Chen’s stake to a minority shareholder through a liquidation process determined by the British Virgin Islands government. The proceeds will then be used for potential compensation to Chen’s victims. In Spain, Tabacalera’s objective is to achieve, through Interpath, a definitive separation from Zhi and to obtain the necessary license from the U.S. Office of Foreign Assets Control (OFAC) to allow the company’s banking operations to return to full normalcy.

Among the crimes Chen Zhi is accused of are fraud, money laundering, and human trafficking, which has led two key markets for Tabacalera—primarily the United States, but also the United Kingdom—to block all business activities related to Zhi. The blockade directly affects the American cigar market. Tabacalera USA is currently unable to obtain cigars from factories in the Dominican Republic and Honduras, which are owned by Allied Cigars Corp. The blockade has impacted manufacturing operations in both La Romana and Santa Rosa de Copán, which are operating at reduced production levels while the situation is being resolved. For the time being, there are no supply problems in the large American market because Tabacalera USA still has sufficient inventory in its US warehouses to supply American stores.

Source photo: Web Prince Holding Group