Bankruptcy Petition Filed Against Evergrande NEV Group

By Clare Jim
HONG KONG (Reuters) – A creditor has filed a bankruptcy petition for a unit of China Evergrande (HK:3333) New Energy Vehicle (NEV) Group in a Shanghai court, marking the third such petition against the struggling car company.

A new bankruptcy proceeding could intensify pressure on the liquidators of the parent firm, China Evergrande Group, the world’s most indebted property developer, to recover debts for creditors and attract potential investors for its EV unit.

Details of the Petition
Zhejiang Chint Electrics submitted the bankruptcy and liquidation petition against Evergrande Hengchi New Energy Vehicle (Shanghai) Co due to overdue unpaid debt, according to a filing dated September 4th from the No.3 Intermediate People’s Court of Shanghai.

The court plans to hold a hearing on September 18th to determine whether to accept the petition for a bankruptcy proceeding.

Company’s Response
Evergrande NEV stated in a filing on Thursday evening that it has received the relevant court notice but believes the impact will be minimal. The company is considering contesting the creditor’s application. “The production and operating activities of the relevant subsidiary are at a very low level at the current stage. Therefore, the notice does not have a material impact on the production and operating activities of the group,” they said.

Trading in NEV shares was suspended at 0152 GMT on Thursday after prices fell by 5.4%. The company has applied to resume trading on Friday.

Recent Developments
Last month, a Guangzhou court ordered two other units – Evergrande New Energy Vehicle (Guangdong) and Evergrande Smart Automotive (Guangdong) – to enter bankruptcy and reorganization proceedings, which Evergrande warned would significantly impact its production and operating activities.

In a recent announcement, Evergrande NEV reported a net loss of 20.3 billion yuan ($2.9 billion) in the first half of the year, deepening from a loss of 6.9 billion a year ago. Total liabilities increased by 2.5% since the end of December to 74.4 billion yuan, while total assets dropped by 53% to 16.4 billion yuan, and total cash plummeted by 69% to just 39 million yuan.

The company’s auditor noted that significant uncertainties from the financial results could severely affect the group’s capacity to continue as a going concern.

($1 = 7.0999 Chinese yuan renminbi)