The 2019 Shanghai auto show in Shanghai, April 16, 2019. The 18th Shanghai International Automobile Industry Exhibition is open to the media on Tuesday and Wednesday, before opening its doors to the public from Thursday until April 25. The exhibition has attracted more than 1,000 exhibitors from 20 countries and regions worldwide, according to organizers. (Photo: China News Service/Zhang Hengwei)

 

China's Huachen Automotive Group, the parent of Brilliance Automotive Holdings, which is also the Chinese joint venture partner of BMW, formally entered into bankruptcy restructuring on Friday.

According to a court ruling, the group had insufficient assets to pay off all debts, but the group has the value and potential to survive, as well as the ability to reorganize itself.

The semi-annual report of Huachen this year showed that the total liabilities of the group are 52.376 billion yuan ($7.97 billion), and the debt-to-asset ratio exceeds 110 percent.

The reorganization only involves the self-owned brand sector of the group's headquarters, and does not involve the group's listed companies and joint ventures with BMW and Renault, according to Xinhua News Agency.  

As BMW's most important partner in China, the group is expected to achieve a rebirth after the reorganization and will do its utmost to recover creditors' losses. At the same time, BMW Brilliance will be a stable source of profits in the future, and it will continue to launch new products and expand its scale, Xinhua reported, citing people inside the group. 

Huachen Automotive Group is a state-owned enterprise under the State-owned Assets Supervision and Administration Commission of Liaoning Province. The group has two joint venture brands: BMW Brilliance and Renault Brilliance.

This year, due to COVID-19, the operating conditions of Huachen's own brands have further deteriorated, and long-term accumulated debt problems have broken out.

In August this year, many of the remaining bonds of Huachen plummeted. In October, Huachen was once again caught in a whirlpool of public criticism due to its failure to redeem private placement bonds of 1 billion yuan on schedule.

As of October 23, there are 14 outstanding bonds of Huachen, with a total bond balance of 17.2 billion yuan, data from Guangfa Securities showed.