Original title: Filed for bankruptcy liquidation by multiple creditors *ST RashaFaced with the risk of delisting
Our reporter Yin Gaofeng
Will La Chapelle (securities abbreviation “*ST Laxia”), once known as the “Chinese version of ZARA”, go bankrupt?
Recently, *ST Laxia issued a reminder announcement about the application for bankruptcy and liquidation by creditors, stating that on November 22, 2021, La Chapelle learned from the People’s Court of Xinshi District, Urumqi that the company’s creditor Jiaxing Chengxin Garment Co., Ltd. (hereinafter (Hereinafter referred to as “Jiaxing Chengxin”), Haining Hongshulin Clothing Co., Ltd. (hereinafter referred to as “Mangrove”), Zhejiang Zhongda Xinjia Trading Co., Ltd. (hereinafter referred to as “Zhejiang Zhongda”) submitted the “Bankruptcy Application”.
Subsequently, the topic “La Chapelle was filed for bankruptcy and liquidation” quickly became a hot search.
“From the current situation, there is still uncertainty about whether it will go bankrupt, and a series of legal procedures are required.” Dou Fangxu, senior partner of Jintiancheng Law Firm, said in an interview with a reporter from the Securities Daily.
Creditors apply for *ST Raxia bankruptcy liquidation
Regarding creditors Jiaxing Chengxin, Mangrove, and Zhejiang Zhongda’s submission of the “Bankruptcy Application” to the People’s Court of Urumqi Xinshi District, *ST Laxia said that according to relevant regulations, the approval of the company registration authority is the market supervision of the Xinjiang Uygur Autonomous Region. According to the Administration, bankruptcy cases of companies should generally be under the jurisdiction of the Intermediate People’s Court. The applicant applied to the New Urban District Court (the basic people’s court) for the company’s bankruptcy liquidation, and his request did not comply with the relevant legal procedures. The company will promptly submit an objection application for bankruptcy liquidation to the New Urban District Court; at the same time, the company did not receive the court’s information about this time. Any ruling on bankruptcy liquidation, this time the creditors apply for the company’s bankruptcy liquidation is very uncertain. The company will continue to actively communicate with creditors, courts, etc., strive to eliminate adverse effects as soon as possible, and do its utmost to protect the interests of the company, shareholders, especially small and medium shareholders.
*ST Rasha said that if the relevant court finally accepts the company’s bankruptcy liquidation application and the company is declared bankrupt by the court, according to relevant regulations, the company’s A shares will face the risk of being terminated from listing. At present, the company’s A shares have been subject to delisting risk warnings and other risk warnings. If the company has one of the circumstances specified in Article 13.3.12 of the Shanghai Stock Exchange’s Stock Listing Rules in 2021, the Shanghai Stock Exchange will decide to terminate company A. Stocks are listed.
“Creditors apply for bankruptcy of the debtor company. The court needs to decide whether to accept the bankruptcy application based on whether the creditor’s rights and the debtor company’s assets have reached serious insolvency.” Dou Fangxu believes that the current bankruptcy application is applied to the grassroots court and will be held in the future. For transfer to the local intermediate court, the acceptance and trial time will be delayed. Even if it is accepted, it will go through a series of legal procedures such as bankruptcy, reorganization and reconciliation. “Whether a listed company will delist or not is currently unpredictable.”
In an interview with a reporter from the Securities Daily, Tie Han, a taxation expert and a distinguished professor of the School of Management of Xi’an Jiaotong University, said, “After the court accepts a company’s bankruptcy case, if bankruptcy reorganization is not possible, or there is no need for bankruptcy reorganization, it will enter Bankruptcy liquidation procedures. First, a bankruptcy liquidation team should be established to confirm the company’s claims, debts and bankruptcy property; secondly, the balance of the bankruptcy property after paying bankruptcy expenses, owed employee wages and owed national taxes can be used for bankruptcy claims If there is a priority for repayment, it shall be repaid first; if the bankruptcy property is not repaid in the same order, it shall be repaid on a pro rata basis.”
Blind expansion leads to high debt ratio
Behind the creditors’ application for bankruptcy and liquidation is the status quo of *ST Laxia’s poor management and heavy debts.
The announcement shows that *ST Laxia has contract disputes with Jiaxing Chengxin, Hongshulin, and Zhejiang Zhongda. The above-mentioned company believes that *ST Rasha’s assets are insufficient to pay off all debts or obviously lack the ability to pay off, so they filed an application for bankruptcy liquidation of the company to the court.
Tong Tiehan analyzed that the ostensible cause of corporate bankruptcy was the inability of the company to pay off due debts due to the lack of funds; the deep-seated reasons were mainly due to improper occupation by shareholders, poor management, chaotic management, and excessive borrowing that caused problems in the capital chain.
In recent years, *ST Rasha’s debt problems have been accumulating, and the pressure of debt repayment has become heavier. Data show that from 2017 to 2020, the company’s asset-liability ratio was 48.31%, 59.01%, 85.94%, and 119.7%. The 2021 third quarter report shows that as of the end of the third quarter, the company’s total assets were 2.889 billion yuan, total liabilities were 3.861 billion yuan, and the debt-to-asset ratio reached 133.63%, the highest since its listing.
Public information also shows that *ST Rasha’s total of 126 million yuan of funds in 144 bank accounts have been frozen, and the equity of 17 subsidiaries of the company have been frozen. The amount involved in the execution of the case is about 673 million yuan, and the book value is about 1.7 billion yuan4 The real estate was seized.
“From the perspective of financial performance in recent years, the company has clearly lost its ability to’only add, not subtract’.” Kuang Yuqing, the founder of Lens Research, said in an interview with a reporter from Securities Daily that the company has been In the expansion of stores, the operating efficiency of each store is very low, focusing only on scale and not efficiency, resulting in larger scale and heavier burden. The last is “the ship is in trouble turning around”. When the critical point is reached, it will be difficult to remedy it.
“*ST Laxia, as an enterprise in the clothing segment, has passed the mature stage of development and is in a recession stage. The input-output ratio has fallen. The business performance, stock price and market value of the company will also shrink accordingly.” Independent economist Wang Chikun told the Securities Daily reporter that if the input is not increased, the company’s business will shrink rapidly; if the input is increased, the input-output ratio will be too low and the gross profit margin will continue. Decline, the business will gradually shrink. It is very difficult for the company to get out of the operating dilemma.
Professional investor Cheng Yu said in an interview with a reporter from the Securities Daily that the channel expansion of the apparel industry must focus on the characteristics and positioning of specific brands. Severely dispersed, each brand cannot get precise positioning and marketing, and cannot highlight its popularity and reputation, and it is difficult to achieve satisfactory sales and gross profit margins, and losses are inevitable. The expansion of borrowing will inevitably lead to high debts and even defaults.
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