In the city of Chongqing on October 13, a lawsuit was held on the bankruptcy case of the Lifan holding. The parent legal entity and ten of its subsidiaries, including the automobile Lifan Motors, were declared insolvent on August 11, but now the stage of sale of assets and settlement of debts begins.
The meeting on Lifan was preceded by two months of preparatory work, until September 30, the court accepted applications from creditors, Chinese media write. A total of 489 claims were filed for a total of 1.128 billion yuan (=$167.6 million). Of these, the judge approved the claims for 700 million yuan (=$104 million), since some of the claims were not supported by documents or are in the stage of pending litigation. Separately, there are 162 outstanding civil and arbitration claims for 870 million yuan (=$129 million). However, Lifan's total debt is much larger - 16.8 billion yuan (=$2.5 billion).
The automotive business for Lifan was not the main one, most of the profits for her in successful years were brought by the production of motorcycles, but this direction did not eventually pull the company out of the crisis.
The court previously appointed the leadership of Chongqing Bank responsible for the sale of Lifan's property.
Chinese media write that the source of Lifan's problems is inefficient management and the uncompetitiveness of its products. The company, founded by entrepreneur Yin Mingshan, fell into disrepair after he stepped aside from operational management and attracted his son, daughter and wife to the management of the holding.
When the business began to decline, Mingshan replaced his son as chairman of the board of Lifan Motors with a hired specialist named Chen Wei, who was previously responsible for new developments. In April of this year, the owner of Lifan appointed his 25-year-old granddaughter Yin Annie, who did not even graduate from graduate school, to the position of executive director. Then in April, the farce began: Lifan sued himself - his subsidiary Panda Motors demanded 800 million yuan in compensation from the car manufacturing division for defective products.
In the Chinese car market, Lifans have always been considered low-quality machines - both gasoline and electric.
According to independent Chinese experts, Lifan will not get out of the crisis on its own. He is waiting for the sale of assets, the automotive division may be absorbed by a more successful company. Geely was recently named one of the possible buyers of Lifan, but both sides deny this.
Car manufacturer Lifan went bankrupt
