Caixin
Jul 10, 2020 06:22 PM
BUSINESS & TECH

Is This the End of the Road for Struggling Carmaker Lifan?

What’s new: Creditors of 10 subsidiaries of debt-mired automobile and motorcycle manufacturer Lifan Industry Group Co. Ltd. have petitioned a Chongqing court to forcibly put the units into a court-led reorganization under Chinese bankruptcy law.

All of the units were unable to repay their financial obligations on time, Lifan said in a stock exchange filing dated Friday (link in Chinese).

Lifan added that production and business at the affected units was generally “not normal.”

What led to here and what’s next: The subsidiaries and their creditors must now wait for a judge to decide whether to accept the reorganization application. One of Lifan’s creditors already filed to put the company into a court-led reorganization at the end of June.

Founded in 1992, Lifan has become marginalized in China’s immense car market, which is the world’s largest but is also highly competitive. The company’s sales tumbled to just 19,000 vehicles last year from 111,000 in 2017, and it sold just over 1,200 vehicles in the first five months of this year.

A previous version of this story incorrectly reported that Lifan’s creditors had petitioned a Chongqing court to put it into bankruptcy. It was actually the creditors of 10 of Lifan’s subsidiaries.

A previous version of this story incorrectly reported that Lifan’s creditors had petitioned a Chongqing court to put it into bankruptcy. It was actually the creditors of 10 of Lifan’s subsidiaries.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Related: In Depth: Chinese Automakers Feel Winter’s Chill

Contact reporter Yang Ge (geyang@caixin.com)

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