Brilliance Group's bankruptcy reorganization was obstructed and long, and a new lawsuit with a maximum loss of 1.391 billion yuan was added

On December 16, Capital State learned that Hong Kong-listed company Brilliance Automotive (Brilliance China) announced the latest progress in the litigation of one of the company's wholly-owned subsidiaries, Jinbei Automobile Control.

According to the announcement, on December 15, according to the recent ruling of the Shenyang Intermediate People's Court, the judgment of the Group's rmb1.391 billion litigation trial judgment of Harbin Bank, the RMB490 million litigation judgment of Everbright Bank, the RMB1.818 billion litigation trial judgment of China Everbright Bank and the RMB156 million litigation judgment of China Everbright Bank, according to the recent ruling made by the Shenyang Intermediate People's Court, the group's maximum loss was estimated to be about RMB1.391 billion.

The Company is of the view that the above judgment will not affect the normal business and operation of the Group at present. In addition, trading will continue to be suspended on the secondary market until further notice.

The road to reorganization is long

Brilliance Group's road to bankruptcy and reorganization is also obstacle and long. At the beginning of December this year, brilliance group announced the draft reorganization plan, but announced that its bankruptcy reorganization plan had been postponed again.

On December 3, Jinbei Automobile, a listed company under Brilliance Group, issued an announcement that the company received a "Notification Letter" issued by Shenyang Automobile Industry Asset Management Co., Ltd., and the Shenyang Intermediate People's Court ruled that the deadline for submitting the draft substantive merger and reorganization plan of 12 enterprises, including Brilliance Automobile Group Holdings Co., Ltd., was extended to June 3, 2022.

It is reported that this is the second time that Brilliance's reorganization plan has been stranded. On September 3 this year, the Shenyang Intermediate People's Court ruled that the deadline for submitting the draft reorganization plan for the substantive merger and reorganization of 12 enterprises, including Brilliance Automobile Group Holdings Co., Ltd., was extended to December 3, 2021.

In response to the second postponement, relevant people within Brilliance Group said that the restructuring plan was postponed because the epidemic prevention and control measures had an impact on the reorganization work.

It is worth noting that just a few days before the announcement of the extension, at the end of November, it was reported that BMW China's project to acquire some assets related to the production of Chinese brand automobiles and the equity of Brilliance Manufacturing Co., Ltd. for 1.633 billion yuan was stopped, and 12 companies including Brilliance Group substantially merged and reorganized or re-recruited restructuring investors. However, BMW China responded that the acquisition project continued to receive support from all parties and was proceeding as planned.

At the second creditors' meeting, three proposals, including BMW China's acquisition of the "Zhonghua" automobile brand, were all passed. Among them, BMW China will acquire the "Zhonghua" automobile brand for 1.633 billion yuan. According to public information, as of November 20, 2020, the total number of assets related to the production of the "Zhonghua" automobile brand was 1.233 billion yuan, and compared with the total value of assets, the purchase price of 1.633 billion yuan issued by BMW China had a premium of 400 million yuan, which means that BMW China spent 400 million yuan to purchase the production qualification of the whole vehicle.

Zhang Xiang, an analyst in the automotive industry, said that through the acquisition of BMW, it can expand production capacity at a lower cost, which is conducive to the divestiture of non-performing assets for Brilliance Group, reduce the complexity of restructuring, and quickly return funds.

Riddled with debt

However, even if BMW China's acquisition is successful, 1.633 billion yuan is a drop in the bucket for Brilliance Group, which is riddled with hundreds of billions of debts.

Brilliance Group's 2020 semi-annual report shows that the group's total liabilities are 132.844 billion yuan, and the asset-liability ratio is 71.4% after deducting goodwill and intangible assets. The balance of cash and cash equivalents at the end of the period was $32,677 million. On August 20 this year, Brilliance Group issued an announcement that as of August 19, 2021, the manager had accepted a total of 6,004 creditors to declare claims, with a total amount of RMB54.2 billion, of which the total amount confirmed by the manager's preliminary review or suspension was RMB50.8 billion.

The industry generally believes that the current Brilliance Group is difficult to save itself. Jinbei Automobile also admitted in the announcement that at present, the relevant parties have not yet launched all plans and plans for the reorganization of Brilliance Group, and there is uncertainty about whether Brilliance Group can successfully reorganize.