【Cage: Hongda Xingye Co., Ltd.-R Hongda 1 Suspended】Wuhai Intermediate Court Rules to Accept Hongda Xingye Co., Ltd. Bankruptcy Application

【Hongda Xingye Co., Ltd. - Hongda 1 Trading Halt】 Wuhai Intermediate Court approves acceptance of Hongda Xingye Co., Ltd.'s bankruptcy reorganization application

2025 will be an extraordinary year. After multiple negotiations with Hongda Xingye Co., Ltd.'s office in Guangzhou and registered in Yangzhou, dozens of creditors have repeatedly traveled to Guangzhou, Nanjing, Hangji Town in Yangzhou, Jingzhen in Yangzhou, Gong’an Orange in Hangji Town, and the registered Shuguang Road, as well as several Zhengfu Men in Zhengfu, and some creditors have fainted from exhaustion. Many creditors oppose the sole reorganization of Hongda Xingye’s core subsidiaries and the bond issuance project subsidiary, and have applied for substantive merger bankruptcy reorganization of Hongda Xingye Co., Ltd.

Currently, Hongda Xingye Co., Ltd. cannot settle its due debts, and its assets are insufficient to cover all liabilities or clearly lack the ability to pay. As a creditor, Zhang Zhenhuan has filed an application for reorganization with the People’s Court, which complies with legal regulations. Additionally, our court accepted the bankruptcy reorganization cases of Inner Mongolia Wuhai Chemical Co., Ltd. on September 26, 2023, and Inner Mongolia Zhonggu Mining Co., Ltd. on March 14, 2024. Both companies are subsidiaries of Hongda Xingye Co., Ltd. and have high reorganization value. Centralized jurisdiction and coordinated hearings of these three cases are more conducive to safeguarding employee rights, reducing creditor costs, and fairly protecting creditor interests.

In summary, according to Articles 2, 7, second paragraph, 70, first paragraph, and 71 of the Enterprise Bankruptcy Law of the People’s Republic of China, the following ruling is made: the application for reorganization filed by applicant Zhang Zhenhuan against respondent Hongda Xingye Co., Ltd. is accepted.

This ruling takes effect immediately.

Retail investors and bondholders of Hongda are also entering the same trap. Confronted with over 2 billion yuan raised through Hongda bonds, no new production line of 300,000 tons annually has been built, and 16.9 yuan was actually diverted by the actual controller through temporary capital injections into Hongda Xingye Group, which is jointly owned by his spouse, and cannot be repaid. These funds are claimed to have been returned to the designated fund account!

See details:

“Hongda Xingye unauthorized changes to the use of funds raised in 2019, involving an amount of 1,691,280,000 yuan. Among them, 69 million yuan in 2019 and 1,622,280,000 yuan in 2020. These funds were mainly used by the controlling shareholder Hongda Xingye Group Co., Ltd. (hereinafter referred to as Hongda Group) and its related parties.”

“On January 13, 2022, Hongda Xingye issued an announcement titled ‘Regarding the repayment of idle funds used for temporary working capital supplementation,’ stating that as of the announcement date, all 848,350,000 yuan of idle raised funds used for temporary working capital had been returned to the fund account. The company disclosed in its 2022 annual report that as of January 13, 2022, all 848,350,000 yuan of idle funds used for temporary working capital had been returned to the fund account. However, these funds were not actually repaid; instead, the company used its own funds and borrowed funds, through subsidiaries and third-party bank accounts, repeatedly cycling funds to falsely return them to the fund account. The previous announcement and report contain false statements.”

“From January 2020 to June 2023, Hongda Xingye manipulated original financial statements by altering accounting books, instructing auditors to create fictitious audit adjustment entries, and falsifying financial reports. This affected the financial data of subsidiaries Inner Mongolia Wuhai Chemical Co., Ltd. (hereinafter Wuhai Chemical), Inner Mongolia Zhonggu Mining Co., Ltd. (hereinafter Zhonggu Mining), Western Environmental Protection Co., Ltd. (hereinafter Western Environmental), and Inner Mongolia Menghua Hailibo Bay Power Generation Co., Ltd. (hereinafter Menghua Power). The company fabricated revenue, costs, and expenses for each period, inflating operating income by a total of 3,505,452,250.52 yuan and total profit by 4,077,671,116.96 yuan. Specifically, in 2020, inflated revenue was 854,810,460.04 yuan, with a reduction of 110,065,987.55 yuan in costs, and inflated profit of 964,876,447.59 yuan; in 2021, inflated revenue was 1,793,264,905.13 yuan, with costs and expenses inflated by 852,902,333.86 yuan, and inflated profit of 940,362,571.27 yuan; in 2022, inflated revenue was 857,376,885.35 yuan, with costs and expenses reduced by 1,244,996,712.84 yuan, and inflated profit of 2,102,373,598.19 yuan; from January to June 2023, costs and management expenses were reduced by 45,158,499.91 yuan and 24,900,000 yuan respectively, with inflated profit of 70,058,499.91 yuan. The inflated profits during these periods accounted for 94.11%, 94.42%, 618.70%, and 12.84% of Hongda Xingye’s disclosed profits, respectively.”

Shocking — report to authorities, yet Wuhai and Yangzhou have not accepted any cases!

We hope retail investors and creditors pay close attention!