The bad debt crisis caused Brilliance to be subject to bankruptcy by the court, according to the creditors’ application.
Huachen Automotive Group Holdings Company Limited (Huachen Group), the parent company of Brilliance Auto, officially entered the bankruptcy process on November 20, after the Shenyang City Intermediate People’s Court approved the application. creditors because they cannot afford to repay.
Huachen, a state-owned company owned by the Liaoning government, defaulted on a nearly $ 152 million worth of bonds last month, and is scheduled to pay bondholders on October 23.
The source said that Huachen Group will declare bankruptcy, but Qi Kai, vice chairman of Huachen, denied this, saying: “I have not heard about bankruptcy, everything is still working.
In the same bankruptcy process, the company may have to reorganize operations, but only related to its own brands such as Brilliance, not in joint ventures with BMW and Groupe Renault. BMW Brilliance Automotive (BBA) will remain a sustainable source of profits for Huachen, launching many new products in the future. In the first half of the year, BBA reached $ 671 million in net profit, while the group’s total profit was $ 610 million, showing that the rest of the company’s businesses are at a loss.
The German luxury car company said there is no indication that the agreement to increase BMW’s stake in the BBA joint venture was affected by the bankruptcy information of Brilliance’s parent company. In 2018, BMW said it would pay $ 4,275 billion by 2022 to increase its stake in BBA to 75% from 25%. Both BMW and Brilliance signed the agreement.
Brilliance Auto has three car brands of its own, Zhonghua, Jinbei and Huasong, and two joint venture brands, BMW Brilliance and Renault Brilliance. According to Brilliance China ‘s 2019 annual report, about 75 percent of its passenger car sales last year were Brilliance-BMW.
Doan Dung (According to the: thestandard)