Chongqing Lifan Group is one of the typical "Star" private enterprises from prosperity to decline. Since 2017, Lifan Group's debt crisis has gradually intensified. In the first half of 2020, it has reached the brink of insolvency and complete paralysis of enterprises, which has affected the development of Chongqing's automobile industry and regional financial ecological security to a certain extent.
In the face of the bankruptcy risk of Lifan Group, Chongqing adheres to the principle of "legalization and marketization" and introduces Geely as a strategic investor. With the strong support of judicial organs, financial regulatory departments and financial institutions, it has not only smoothly "dismantled the bomb" through judicial restructuring for more than a year, but also introduced Geely's "golden egg" of power exchange new energy vehicle industry and a number of well-known professional intermediaries.
"Dying" Lifan how Nirvana rebirth? What is the Enlightenment of this sample case for local governments to prevent and resolve major risks and restructure and extricate large private enterprises from difficulties? The reporter conducted an in-depth investigation.
Why were the former "Star" private enterprises on the verge of bankruptcy?
In 1992, Yin Mingshan, 54, the founder of Lifan Group, founded Lifan in a farm house. After years of development, Lifan has become one of the leading enterprises in motorcycle manufacturing and export in China. At its peak, Lifan Group was involved in automobile and motorcycle, finance, real estate, sports and other industries, with more than 100 foreign subsidiaries in China.
However, in recent years, due to the prominent disadvantages of family management of Lifan Group, the lack of technology R & D capacity, and the changes in the objective environment, Lifan automobile's Chinese market is lack of competitiveness, the production and sales volume has plummeted, and the overseas market supported by Lifan automobile has also suffered significant losses. The full caliber sales volume of automobile has decreased from about 130000 in 2017 to more than 20000 in 2019.
After facing difficulties in the development of traditional fuel vehicles, Lifan borrowed heavily to invest in new energy vehicles, trying to seek strategic transformation, and invested about 5 billion yuan to develop new energy batteries and complete vehicles. However, due to defects such as product quality, design positioning and technical route, it was basically unable to sell normally, plus huge losses in the shared vehicle business, and the strategic transformation ended in failure. At the same time, Lifan's diversified businesses such as finance, property and real estate have small profits. Although the motorcycle business is profitable, it can not make up for the loss of the automobile sector. Since 2017, the debt problem of Lifan Group has become increasingly apparent.
In order to save itself, Lifan Group drank poison to quench thirst after all the effective assets were mortgaged and pledged and basically lost its normal financing ability. It adopted high leverage financing such as financial bills and private lending on a large scale, with an annual financial cost of up to 1.5 billion yuan, and finally fell into the crisis of capital chain rupture and main business stagnation.
In 2018, Chongqing assisted Lifan Group by coordinating the financing of financial institutions, collecting and storing Lifan plant land and cooperating with other enterprises, but with little effect. A person in charge of Lifan restructuring special class said: "the crisis of Lifan Group is caused by systemic problems. Relying on external blood transfusion and simple debt restructuring alone is unable to recover."
By August 2020, before the judicial reorganization, Lifan Group's asset evaluation value was about 13.6 billion yuan, while its liabilities were about 27.3 billion yuan, of which the creditor's rights of financial institutions accounted for nearly 80% of the total debt; The highest number of litigation cases was more than 1200, and its main bank accounts and assets were sealed up and frozen.
Once Lifan Group goes bankrupt and liquidates, the average debt repayment rate will be less than 10%, the unsecured creditor's rights of financial institutions will be cleared, the majority of minority shareholders will suffer heavy losses, thousands of employees will face unemployment, and more than 2000 auto and motorcycle supporting enterprises will be affected Bank Of Chongqing Co.Ltd(601963) an executive said that Lifan's "Thunderstorm" will not only impact the local pillar automobile industry and employment stability, but also damage the regional financial ecology.
Promote judicial reorganization and start twists and turns to "lead the war"
According to the relevant responsible comrades of Liangjiang New Area in Chongqing, the relevant parties in Chongqing believe that the introduction of strategic investors through judicial restructuring and the introduction of the whole Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) and management system is an effective path for Lifan to "come back from the dead", and it is clear that Liangjiang New Area will take the lead to promote Lifan's judicial restructuring in accordance with the principles of rule of law and marketization.
Liangjiang New Area attaches great importance to and acts quickly. While supporting Lifan Group to maintain stability and continue production, it has transferred capable forces to set up a special working class, and hired well-known lawyers, accounting firms and other intermediaries to comprehensively promote Lifan's judicial reorganization.
The investigation of Liangjiang New Area and intermediaries found that Lifan judicial reorganization is very difficult, and many problems have no precedent to follow. First, Lifan Group is a private enterprise, adhering to the boundary between the government and the market, testing the scientificity and legitimacy of local decision-making; Second, at that time, the sales volume of most auto enterprises fell and they were too busy to take care of themselves, and the introduction of strategic investors once hit a wall everywhere; Third, there are a large number of creditors with different demands. Some creditors collect debts in extreme ways. It is very difficult to balance the interests of all parties and reasonably design the reorganization plan; Fourth, Lifan Group has many subsidiaries, chaotic internal management and heavy task of asset and financial audit; Fifth, time is tight. In August 2020, Lifan listed company has been warned of delisting risk. If the reorganization is not completed in that year, it will be delisted in the coming year, and the bankruptcy liquidation of Lifan Group will be a foregone conclusion.
"At that time, Lifan was like a 'vegetable'. It not only needed blood transfusion to maintain life, but also to restore its hematopoietic function and wake up from shock as soon as possible. It was conceivable that it was difficult!" An industry source said.
To promote judicial reorganization, we must first find appropriate strategic investors. In the face of Lifan facing the abyss, Yin Mingshan, who has been in his 80s, asked for help everywhere and tried to prevent the enterprise from going bankrupt, but no one was willing to accept the offer.
After Yin Mingshan failed to seek help in many ways, Chongqing authorities coordinated with China's mainstream auto enterprises, but most auto enterprises said they had no intention to participate in Lifan restructuring, leading the war into trouble.
Through in-depth research, Chongqing has made it clear that Geely, an independent brand car enterprise growing against the trend in that year, is the key introduction target. Xu Zhihao, CEO of Geely technology group, was invited to lead the team to visit Lifan twice. After repeatedly studying the restructuring path and communicating for many times, Geely was finally successfully introduced to participate in the restructuring in December 2019.
The relevant person in charge of Geely Holding Group admitted that Geely also faced many difficulties during the in-depth adjustment of the automobile industry at that time, and the opposition within the group was very strong. However, Li Shufu, chairman of Geely Holding Group, thought repeatedly and finally persuaded the members of the board of directors to participate in Lifan judicial reorganization.
In an interview with reporters, Li Shufu said: "First, participating in the restructuring is Geely's response to the national western development and the construction of the Chengdu Chongqing economic circle, as well as the National Encouragement to give full play to the role of the market, the merger and reorganization of new energy enterprises, become bigger and stronger, and improve the industrial concentration. Second, Lifan has been deeply engaged in the automotive and motong industries for many years. It is a well-known enterprise in the industry, and its brand has a certain recognition and influence in the market. Third, Geely is a company Enterprises willing to undertake social responsibility. Once Lifan goes bankrupt, it will have a great impact on the local upstream and downstream industrial chain, employee employment and social stability. "
Clear the biggest "roadblock" of reorganization
After the initial decision of the war investment, in April 2020, Chongqing Liangjiang New Area, Geely technology group, Jindu law firm, China International Capital Corporation Limited(601995) , PricewaterhouseCoopers Consulting Co., Ltd. and other intermediaries jointly established Lifan reorganization project team (hereinafter referred to as the project team) to carry out judicial reorganization.
As soon as the project team was established, it encountered "a fierce stick". The audit of intermediary institutions found that Lifan finance company with financial license normally collected nearly 4 billion yuan of group funds, but at this time, the company has no repayment ability, and objectively formed the non operational occupation of funds of listed companies by controlling shareholders.
The premise of judicial reorganization of listed companies is that there are no violations. If this problem is not solved in time, it will constitute violations and violations, resulting in the failure of judicial reorganization to pass the approval of regulatory authorities.
Zhong Xian, vice president of Geely technology group, told reporters that judicial reorganization usually takes a year or two or even longer. At that time, the time left for the project team was very urgent. If the potential violation of fund collection is not solved by the end of May 2020, judicial reorganization cannot be started. Due to a large number of mutual guarantees and related party transactions among enterprises within Lifan Group, it is extremely difficult to clarify the relationship between creditor's rights and debts one by one. "This is the biggest problem encountered in Lifan's judicial reorganization. At that time, some intermediaries were ready to leave," she said
In order to solve the fund collection as soon as possible and win valuable reorganization time, the project team found out the base number of creditor's rights and debts one by one, and formulated 89 specific solutions such as clean asset injection and guarantee liability return.
"There are many risks in Lifan's judicial reorganization process, and I don't know whether it can be done in the end at the beginning. But we did it hard, and the whole process is very difficult." Xu Zhihao said.
"At that time, the members of the project team could be said to be 'going to bed late, getting up early and not staying overnight', working all night. If they couldn't stand it, they had to sleep in turn." Zhong Xian recalled. After nearly two months of hard work, the project team cleared more than 300 current funds and more than 500 bank accounts. In May 2020, it finally helped the controlling shareholders return the nearly 4 billion yuan of funds suspected of being occupied one by one and smoothly entered the judicial reorganization procedure.
Innovative implementation of judicial reorganization of large private enterprises
After solving the problem of fund collection, the project team put forward the "coordinated implementation of listed and unlisted sectors, and the" equity + debt + assets + operation "package reorganization plan to fully promote the judicial reorganization of Lifan.
- avoid direct government intervention through the fund model. Liangjiang New Area's subordinate equity investment funds and Geely jointly invested and leveraged the national large funds and social funds, totaling 3.02 billion yuan, established the "Manjianghong investment fund", transferred 29.99% of the shares of Lifan listed company and became a major shareholder.
-- solve Lifan's debt crisis systematically through paying debts with shares and trust plan. Lifan Group covers listed companies, licensed non bank financial institutions and non listed companies. The restructuring of one or more companies alone cannot resolve the debt crisis. The project team comprehensively sorted out 139 enterprises of Lifan Group, and finally determined that 24 enterprises in total of "11 listed sectors + 13 unlisted sectors" were restructured, accounting for 95% of the group's total liabilities and 99% of its core assets. Other companies were disposed of in the way of "one enterprise, one policy".
In terms of debt in the listed sector, on the basis of the original total share capital of Lifan listed company of more than 1.3 billion shares, 3.2 billion shares were increased through capital reserve, of which more than 960 million shares were used to pay off debts, 900 million shares were used to introduce industrial investors, and more than 1.3 billion shares were used to introduce Manjianghong investment fund; In the unlisted sector, the trust plan is formulated with 618 million shares of Lifan listed company held by Yin Mingshan family as the core assets, and the creditors will be compensated and withdrawn through stock appreciation in the future.
-- Classification and fine communication to win the support of creditors. The workload of coordinating nearly 3000 creditors to agree to the reorganization plan is very heavy. The project team combs the interest demands of different creditors, classifies and communicates carefully, selects 87 key creditors with a total amount weight of more than 80%, and formulates a one-to-one communication plan.
The relevant person in charge of the project team said: "on average, we have to communicate and explain with more than 600 creditors every day." The project team raised the average repayment rate of Lifan's debt from less than 10% to more than 34% by means of cash repayment of small claims, installment of property secured claims, conversion of shares and distribution of trust beneficial rights, and won the support of most creditors.
However, some creditors of financial institutions have pledged, and even if Lifan goes bankrupt, the liquidation loss is small. How to persuade these creditors to agree to the reorganization plan is a key. To this end, Chongqing actively coordinated the support of the CSRC, the CBRC, the Shanghai Stock Exchange and other regulatory agencies, and communicated with the creditors of financial institutions for many times. With the full support of all parties, in November 2020, 12 restructuring plans of Lifan listed and unlisted sectors were adopted by a high vote at the creditors' meeting, of which the voting rate of the investor group was 100%.
-- efficient linkage between courts and governments. Under the guidance of the people's Court of Chongqing, the direction of the reorganization project has been determined in advance and communicated with the people's Court of Chongqing for many times. With the support of the Supreme People's court, the litigation cases of Lifan Group are under the centralized jurisdiction of Chongqing No. 1 Intermediate People's court, which ensures the interests of all creditors and the safety of the core assets of Lifan enterprise.
After Chongqing fifth intermediate people's court ruled to accept Lifan's judicial reorganization in August 2020, it took this case as the number one case and reversed the construction period according to important time nodes. The Chongqing municipal government immediately established a joint meeting system with the judicial authorities, and the project team negotiated regularly with the Chongqing bankruptcy court. Finally, the reorganization case of listed enterprises of Lifan Group and the substantive merger and reorganization case of unlisted enterprises were concluded in 102 days and 112 days respectively, avoiding the delisting risk of Lifan listed companies.
"Effective market and promising government" work together
Xu Zhihao, CEO of Geely technology group, said that after the reorganization, the enterprise still retains the name of "Lifan" to ensure that the banner of Chongqing private enterprise will not fall down. At the same time, Geely will fully empower Lifan, inherit tradition, inject new ideas and quickly achieve industrial breakthrough.
In January 2021, Lifan listed company conducted the general election of the new board of directors, board of supervisors and senior management team; In March 2021, Lifan listed company changed its name to " Lifan Technology(Group)Co.Ltd(601777) " (Securities abbreviation: Lifan Technology(Group)Co.Ltd(601777) ); In April 2021, Lifan Technology(Group)Co.Ltd(601777) was successfully "picked up the star and removed the hat" after applying to Shanghai Stock Exchange. Over the past year, Lifan Technology(Group)Co.Ltd(601777) employees' rights and interests protection, main business upgrading, operation management innovation and other work have been carried out intensively, and a new Lifan has "set sail".
Recently, the reporter saw in Lifan Technology(Group)Co.Ltd(601777) automobile assembly factory that the factory, which has been shut down for three years, has regained its vitality, and the workshop is full of newly offline cars. Chen Renguo, an old employee, said: "two years ago, the employees were worried and afraid of unemployment. Now the management mechanism is more reasonable, the salary has also been improved, and the employees have a new look." According to statistics, the average salary of Lifan Technology(Group)Co.Ltd(601777) employees increased by nearly 15%.
In Geely's first intelligent power exchange demonstration station in Liangjiang New Area, the reporter saw that the whole battery can be replaced for new energy vehicles within 90 seconds, and the battery can be charged at staggered peak and maintained intelligently.
the relevant person in charge of Lifan Technology(Group)Co.Ltd(601777) automobile business sector said that after more than a year of production line upgrading and transformation, mass production of two new models for power replacement has been started, and the production plan of 50000 fuel vehicles + 30000 new energy vehicles for power replacement will be completed this year. "The new energy vehicle market needs to be cultivated. Our current two new power replacement models are mainly for b-end network car hailing and taxi users. In the future, we will produce three new power replacement models for C-end consumer users."
In addition, Lifan Technology(Group)Co.Ltd(601777) in the motorcycle business sector, it is accelerating the research and development of "intelligence and electrification", and has established a professional research institute. Six new cars will be on the market this year.
At present, Lifan Technology(Group)Co.Ltd(601777) enterprise operation has been on track. The financial report shows that in 2021, the company achieved an operating revenue of 3.977 billion yuan, a year-on-year increase of 9.35%, and a net profit of 78 million yuan, a year-on-year increase of 42.88%. In the first quarter of 2022, the operating revenue of the company was about 1.25 billion yuan, with a year-on-year increase of 48.74%, and the net profit was 50.85 million yuan, with a year-on-year increase of 220.54%.
"Next, we will accelerate the improvement of the modern corporate governance system of xinlifan, build the restructured Lifan listed company into a listed platform for the manufacturing business of the power exchange industry, form differentiated development, strengthen and expand xinlifan, and bring returns to all stakeholders." The relevant person in charge of Geely Holding Group said.
Industry insiders interviewed believed that Lifan's judicial reorganization not only successfully resolved the bankruptcy risk, but also realized the strong chain repair of Chongqing's automobile industry chain and promoted the settlement of multiple intermediaries. The key lies in that Chongqing does not simply carry out "blood transfusion" rescue of "critically ill" enterprises through administrative means, but adheres to the principle of "legalization and marketization", clarifies the regulatory boundary of local governments, and makes use of the strength of leading enterprises, Under the guidance of judicial organs and financial supervision departments at all levels, organically unify "effective market and promising government".
