Evergrande NEV’s creditors seek bankruptcy proceedings for carmaker’s 2 units
- The bankruptcy petition filed to the local provincial courts on Friday could have a material impact on production and operations, according to an exchange filing
China Evergrande New Energy Vehicle Group (Evergrande NEV) has been served a bankruptcy and reorganisation notice by its creditors, in another sign of deepening troubles facing the carmaking unit of the insolvent China Evergrande Group.
Evergrande New Energy Vehicle (Guangdong) and Evergrande Smart Automotive (Guangdong), two subsidiaries of Evergrande NEV, received the bankruptcy petition filed in the local provincial courts on Friday, which could have a “material” impact on production and operations, the company said in a filing to the Hong Kong stock exchange late on Sunday.
Evergrande NEV’s shares tumbled 9 per cent to HK$0.305 on Monday.
The news comes two months after the carmaker was asked by China’s local governments to return 1.9 billion yuan (US$261.9 million) in subsidies – received under a series of investment agreements in 2019 – for failing to produce and deliver cars.
“Evergrande NEV is now in a difficult position,” said Shen Meng, director at Beijing-based investment firm Chanson & Company.
“Should the company declare bankruptcy, it may lose control of its two subsidiaries, further weakening the quality of its assets. However, given the company’s current condition, [its downfall] will not have an industry-wide impact,” he added.
