Beijing Huaye Capital Holdings Co., Ltd.

Beijing Huaye Capital Holdings Co., Ltd. (华业资本), formerly traded on the Shanghai Stock Exchange under the *ST Huaye designation, is a Chinese investment holding company based in Beijing. It became a listed company through a backdoor listing around 2005 and for years operated as a diversified investment platform whose business included receivables investment and, later, planned healthcare assets. In September 2018 the company disclosed a massive contract fraud — widely reported as the "fake seal" (萝卜章) scandal — involving up to RMB 10 billion of accounts receivable investments. The fraud forced Huaye Capital to book enormous bad-debt provisions, turning a 2017 net asset position of roughly RMB 6.8 billion into a 2018 net loss of more than RMB 6.4 billion and net assets of only about RMB 200 million. The annual report received a "disclaimer of opinion" from its auditor. By the first half of 2019 the company had lost more than RMB 2.7 billion and its net assets had fallen to negative RMB 2.506 billion, leaving it insolvent. Its share price collapsed from RMB 7.34 in September 2018 to below RMB 1 in 2019, putting it at risk of delisting under the par-value rule. In August 2019 management adopted a debt-reconciliation (破产和解) strategy, engaged Zhongrun Economic Development Co. as restructuring advisor, and aimed to complete restructuring by the end of 2019. The controlling shareholder proposed injecting equity in pharmaceutical companies, and directors and executives completed share purchases to support the stock. More than two-thirds of creditors reportedly agreed to a settlement, meeting judicial conditions for reconciliation. The brand is therefore best known not as an operating consumer or industrial brand but as a cautionary case in China's capital markets: a listed investment holding platform whose credibility was destroyed by a fraud-driven balance-sheet collapse.

Beijing Huaye Capital Holdings Co., Ltd. became a listed company through a backdoor listing around 2005, giving it roughly 14 years of public-company history by 2019. It operated as an investment holding platform based in Beijing, with activities that included accounts receivable investment. The turning point came in September 2018, when the company disclosed a contract fraud involving up to RMB 10 billion of receivables investments — the so-called "fake seal" (萝卜章) scandal. Huaye Capital was forced to make huge bad-debt provisions. Its 2017 net assets of about RMB 6.8 billion shrank to roughly RMB 200 million, and it reported a 2018 net loss of more than RMB 6.4 billion. The auditor issued a disclaimer of opinion on the annual report. The share price, which stood at RMB 7.34 on 20 September 2018, collapsed; the company faced lawsuits, credit-rating downgrades, and executives took pay cuts. In December 2018 the company held a briefing promising a preliminary debt-restructuring plan within about six weeks, but progress stalled until July 2019, when it brought in Zhongrun Economic Development Co. as restructuring advisor to organize creditors, draft a plan, and pursue financing or a settlement. By August 2019 management had settled on a debt-reconciliation (和解) route, targeting completion by the end of 2019. General Manager Zhong Xin said more than two-thirds of creditors were willing to settle, satisfying judicial conditions. The controlling shareholder proposed injecting equity in pharmaceutical companies, and directors and executives completed share purchases. By September 2019 the stock had traded below RMB 1 for four consecutive days, and about 60,000 shareholders faced the risk of a par-value delisting. The company said the court was reviewing its reconciliation application.

• Discloses up to RMB 10 billion contract fraud involving receivables investments

• Holds briefing promising preliminary debt-restructuring plan

• Engages Zhongrun Economic Development as restructuring advisor

• Adopts debt-reconciliation strategy targeting completion by end-2019

• Stock trades below RMB 1 for four consecutive days, facing par-value delisting

A listed Chinese investment holding company that became a distressed restructuring case after a major receivables fraud.

• Accounts receivable investment

• Investment holding

• 2019

  Huaye Capital applies for bankruptcy settlement

  Huaye Capital took measures related to a bankruptcy settlement plan, including applying to the court for bankruptcy settlement.

  Source

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• Unconfirmed

  Huaye Capital applies for bankruptcy settlement[1]华业资本破产和解进行时 “面值退市”魔咒待破解finance.sina.com.cn

  Reported: 2019-09-22

  Huaye Capital took measures related to a bankruptcy settlement plan, including applying to the court for bankruptcy settlement.

1. 1华业资本破产和解进行时 “面值退市”魔咒待破解finance.sina.com.cn
2. 2遭萝卜章骗局后：华业卖资产偿债 推进破产和解保壳finance.sina.com.cn