A creditor has initiated a bankruptcy petition against Evergrande Hengchi New Energy Vehicle (Shanghai) Co., a subsidiary of China Evergrande New Energy Vehicle Group, marking the third such petition against the beleaguered car company. The petition was filed in a Shanghai court on September 4, adding further strain to the troubled unit.
Trading in shares of China Evergrande New Energy Vehicle (NEV) was halted at 0152 GMT on Thursday, following a 5.4% drop in its stock price.
The new bankruptcy filing could intensify the pressure on the liquidators of China Evergrande Group, the world’s most indebted property developer, as they work to recover debts for creditors and potential investors in the electric vehicle company.
The petition was lodged by Zhejiang Chint Electrics in response to overdue and unpaid debts. The No.3 Intermediate People’s Court of Shanghai will review the petition in a hearing scheduled for September 18 to determine whether to proceed with bankruptcy proceedings.
This latest development follows a Guangzhou court’s decision last month to place two other subsidiaries—Evergrande New Energy Vehicle (Guangdong) and Evergrande Smart Automotive (Guangdong)—into bankruptcy and reorganization proceedings. The parent company had previously warned that these actions would have a “material impact” on its production and operational activities.
In its most recent financial report, Evergrande NEV disclosed a significant net loss of 20.3 billion yuan ($2.9 billion) for the first half of the year, a sharp increase from a 6.9 billion yuan loss in the same period last year. The company’s total liabilities have grown by 2.5% since the end of December, reaching 74.4 billion yuan. Meanwhile, total assets have plummeted by 53% to 16.4 billion yuan, and total cash reserves have dwindled by 69% to just 39 million yuan.
The company’s auditor has indicated that these financial uncertainties could substantially impact the group’s ability to continue operations as a going concern.
