
Huachen might go under bankruptcy restructuring, as it has defaulted on a 1-billion-yuan ($1 = 6.5842 Chinese yuan), approximately 151.88 million US dollars joining a growing number of state firms in a development that hit investor confidence and roiled China’s credit bond market.
The Chinese joint venture partner of BMW, Brilliance Automotive Holdings, said, “Parent Huachen Automotive Group may undergo bankruptcy restructuring after a creditor filed an application to a Chinese court.”
In an exchange filing on Sunday, Hong Kong-listed Brilliance Auto said, “Huachen, owned by the government of Liaoning province, is facing the prospect of restructuring after Gezhi Automobile Technology Co filed an application to the Shenyang Intermediate People’s Court for the restructuring of Huachen”. It further added, “It remains uncertain whether the restructuring application will be accepted by the court.”
Bondholders see a bankruptcy restructuring by Huachen to be unfavourable as they will likely end up getting little out of the process.
Daiwa Capital Markets reported that Huachen’s bankruptcy will have very little impact on the operation of Brilliance, but this could have a negative result in plans for expected privatization. Although, a Huachen representative declined to comment.