【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 Suspension of Trading】 Wuhai Intermediate Court Rules to Accept Bankruptcy Reorganization Application for Hongda Xingye Co., Ltd.

2025 will be an extraordinary year. After multiple negotiations with Hongda Xingye’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 other creditors who fainted from exhaustion—these scenes are still vivid.
Dozens of creditors demand to oppose the sole reorganization of Hongda Xingye’s core subsidiaries and the bond-raising project subsidiaries, and apply 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 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 now entering the same trap. Confronted with over 2 billion yuan raised through Hongda bonds, which has not been used to build a 300,000-ton annual capacity new production line, and among which 16.9 yuan was actually transferred by the actual controller through temporary capital injections into Hongda Xingye Group, jointly owned by his spouse, and cannot be repaid. These funds are claimed to have been returned to the designated fund account for fundraising!

See details at:

“Hongda Xingye unilaterally changed the use of funds raised in 2019, involving an amount of 1,691,280,000 yuan. Among these, 69 million yuan was involved 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 Raised for Temporary Working Capital,’ stating that as of the announcement date, all 848,350,000 yuan of idle 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 had been returned. However, these funds were not actually repaid; instead, the company used self-owned and borrowed funds, through subsidiaries and third-party bank accounts, to repeatedly cycle funds and falsely report repayment to the fund account. The previous announcement and report contain false statements.”

“From January 2020 to June 2023, Hongda Xingye manipulated financial statements by altering original accounting books, instructing auditors to fabricate audit adjustment entries, and falsifying financial reports, affecting the consolidated statements and 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 Haibo Bay Power Generation Co., Ltd. (hereinafter Menghua Haibo). They falsely increased operating income by a total of 3,505,452,250.52 yuan and total profit by 4,077,671,116.96 yuan during this period. Specifically, in 2020, operating income was inflated by 854,810,460.04 yuan, operating costs reduced by 110,065,987.55 yuan, and total profit increased by 964,876,447.59 yuan; in 2021, operating income was inflated by 1,793,264,905.13 yuan, costs and expenses inflated by 852,902,333.86 yuan, and total profit increased by 940,362,571.27 yuan; in 2022, operating income was inflated by 857,376,885.35 yuan, costs and expenses reduced by 1,244,996,712.84 yuan, and total profit increased by 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 total profit inflated by 70,058,499.91 yuan. The inflated total profits during these periods accounted for 94.11%, 94.42%, 618.70%, and 12.84% of Hongda Xingye’s reported profits, respectively.”

Shocking—going to the authorities, yet Wuhai and Yangzhou have not received any case acceptance!

We hope retail investors and creditors stay closely alert!