Creditor files for liquidation of Evergrande NEV unit

10:57 am Thursday, September 05th, 2024

By Clare Jim

HONG KONG (Reuters) -A creditor filed a petition for the bankruptcy of a unit of China Evergrande New Energy Vehicle (NEV) Group in a Shanghai court, the third such petition against the embattled car company.

A new bankruptcy proceeding could add pressure on the liquidators of parent firm China Evergrande Group , the world’s most indebted property developer, to recover debt for creditors and secure a potential investor in its EV unit.

Zhejiang Chint Electrics filed a bankruptcy and liquidation petition against manufacturing unit Evergrande Hengchi New Energy Vehicle (Shanghai) Co over an overdue unpaid debt, a filing dated Sept. 4 by the No.3 Intermediate People’s Court of Shanghai showed.

The court said it will hold a hearing on Sept. 18 to decide whether it will accept the petition to start a bankruptcy proceeding.

Evergrande NEV said in a filing on Thursday evening it has received a relevant notice issued by the court, but the impact would be small. It added it is considering defending against the application from the creditor.

“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,” it said.

Trading in NEV shares was suspended at 0152 GMT on Thursday, after the price fell 5.4%. The company said it has applied to have trading resume on Friday.

Last month, a Guangzhou court ordered two other units – Evergrande New Energy Vehicle (Guangdong) and Evergrande Smart Automotive (Guangdong) – to enter into bankruptcy and reorganisation proceedings, a move that the EV parent warned would have “a material impact” on its production and operating activities.

Evergrande NEV last week announced a net loss of 20.3 billion yuan ($2.9 billion) in the first half, widening from a 6.9 billion net loss a year earlier.

Its total liabilities rose 2.5% from end-December to 74.4 billion yuan, while total assets fell 53% to 16.4 billion yuan and total cash plunged 69% to 39 million yuan.

The company’s auditor said the material uncertainties from the financial results may have a significant impact on the group’s ability to continue as a going concern.

($1 = 7.0999 Chinese yuan renminbi)

(Reporting by Clare Jim; editing by Stephen Coates and Jason Neely)