Chinese footwear and clothing manufacturer Fuguiniao Co. Ltd. first asked for its shares in Hong Kong to be suspended in September 2016 after it failed to produce preliminary half-yearly earnings results.
Now, three years later, that suspension has been rendered permanent after a court in the eastern province of Fujian declared the company bankrupt, and it was delisted from the Hong Kong Stock Exchange on Monday.
Fuguiniao never released the earnings report under Hong Kong’s generally accepted accounting principles, or any since.
The Quanzhou City Intermediate People’s Court declared the company bankrupt on Friday after rejecting its plans to reorganize, citing a lack of support from creditors, according to a filing by the company to Hong Kong Exchanges and Clearing Ltd. released on Monday.
According to the filing, the company had proposed two reorganization plans that were voted on by creditors in recent months, but failed to win enough support. The company then took the matter to court, asking for an order that a reorganization be implemented.
China’s corporate bankruptcy law holds that a reorganization can only be approved at a meeting of the same voting group of creditors, where more than half of those present agree to reorganize, and where those who vote yes hold at least two thirds of the voting group’s total credit amount.
Those plans didn’t wash with the Quanzhou city court, which found those who voted for the reorganization did not own enough of the company’s bonds.
Another company filing to the Hong Kong Stock Exchange showed that Fuguiniao was booted from the bourse on Monday.
Fuguiniao’s fall will surprise few given the company has been dogged by financial strife. Last year, it was accused of cheating investors by illegally transferring funds raised through bond sales to related companies, which contributed to its failure to make repayments on 2.1 billion yuan ($290 million) in bonds for the year.
Founded in 1995, Fuguiniao went public in Hong Kong in December 2013. It hasn’t published any earnings reports under Hong Kong’s generally accepted accounting principles since 2015 when the company reported a 12.5% year-on-year decline in revenue and a 13.1% decline in profit attributable to shareholders.
Contact reporter Liu Jiefei (jiefeiliu@caixin.com)
