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Huachen, owned by the government of Liaoning province, defaulted on a 1-billion-yuan ($151.88 million) bond last month, joining a growing number of delinquent state firms in a development that hit investor confidence and roiled China’s credit bond market.
Huachen faces the prospect of restructuring after Gezhi Automobile Technology Co filed an application to the Shenyang Intermediate People’s Court for restructuring of Huachen, Hong Kong-listed Brilliance Auto (HK:1114) said in an exchange filing on Sunday. It remains uncertain whether the restructuring application will be accepted by the court, it said.
Bondholders see a bankruptcy restructuring by Huachen to be unfavourable as they will likely end up getting little out of the process.
Huachen’s bankruptcy would have little impact on the operation of Brilliance but could upset plans for an expected privatisation, Daiwa Capital Markets said in a note to clients.
A Huachen representative declined to comment.
($1 = 6.5842 Chinese yuan renminbi)
