About to go bankrupt? Lifan Holdings enters judicial reorganization process


Recently, Lifan Group Corporation (Listed on Shanghai Stock Exchange) announced that Chongqing Lifan Holdings Co., Ltd. (a major shareholder of Lifan Group) was unable to pay off its due debts and was insolvent. It has applied for judicial reorganization to the Chongqing Municipal Court and the company has been filed for bankruptcy reorganization by creditors.

The announcement pointed out that Lifan Holdings holds a total of 619 million shares of Lifan Group, accounting for 47.08% of the total share capital. According to the announcement, if the court officially accepts the application for reorganization of Lifan Group, the company will be at risk of being declared bankrupt due to the failure of the reorganization. In addition, Lifan Group will also face the risk of being terminated from listing.

It is reported that due to the inability to pay off the due debts, many of Lifan Group’s subsidiaries (Lifan Passenger Cars, Chongqing Lifan Automobile Sales Co., Ltd, Lifan Import and Export, etc.) were all applied to the court for judicial reorganization by creditors, and senior executives within the group began to reduce their shares. There have been rumors that Geely Automobile will acquire shares in Lifan and that Lifan will only retain the motorcycle sector in the future, but both parties declined to comment on this.

In terms of sales, Lifan’s new car sales are also declining. From January to June this year, Lifan’s passenger car sales totaled 978 new vehicles, a drop of 95.29% year-on-year, and Lifan’s new energy vehicle sales were 549, a year-on-year drop of 56.32%.

In fact, since 2019, Lifan Motors’ dealers have been withdrawing from the sales network on a large scale. Although Lifan Motors’ sales have continued to decline in recent years, there is still a certain amount of cars circulating in the market. Once Lifan Motors is officially delisted, the current vehicles on the market will face the situation of daily maintenance and repairs. According to the previous situation of Dongfeng-Renault’s delisting, if there is no one to pick up the market, the after-sales problems that Lifan car owners worry about will not be properly resolved. Regardless of whether it is a joint venture brand or a Chinese brand, the legitimate rights and interests of car owners should be protected in compliance with relevant laws.