Baowo Automobile, which once claimed to be comparable to BMW, Mercedes-Benz, and Audi (BBA), officially declared bankruptcy.
On the evening of November 29, Foton Motor (600166.SH) issued an announcement. On November 29, 2022, the company learned that the Beijing No. Ruling, ruling to declare Beijing Borgward Automobile Co., Ltd. (hereinafter referred to as "Beijing Borgward") bankrupt in Beijing.
The Beijing No. 1 Intermediate People's Court held that, based on the results of the confirmation of creditor's rights and the assessed assets of the debtor, Beijing Baowo was unable to pay off due debts and its assets were significantly smaller than its liabilities, which was not enough to pay off all debts.
So far, no reorganization or settlement applications have been filed.
In summary, the Beijing No. 1 Intermediate People's Court ruled that Beijing Baowo has met the statutory conditions for declaring bankruptcy.
The administrator's request to declare Beijing Baowo bankrupt complies with the law.
In accordance with Article 2, Paragraph 1, and Article 107 of the Enterprise Bankruptcy Law of the People's Republic of China, the ruling is as follows: declare Beijing Baowo bankrupt.
This ruling takes effect immediately.
Foton Motor stated that based on the principle of prudence, the company has withdrawn the impairment of related assets of Beijing Baowo.
The bankruptcy of Beijing Baowo will not affect the company's existing main business, nor will it have a significant impact on the company's continued operations.
Foton Motor previously announced that it has made a large amount of impairment provision for related matters related to Beijing Baowo, which is expected to affect the total profit of 2021 - about 4.704 billion yuan. A total of about -5.326 billion yuan will be affected in total profit in 2021.
Born in 1919, Baowo Automobile was once the third largest automobile manufacturer in Germany.
In 2014, Foton Motor spent 5 million euros to acquire the century-old German auto brand Borgward, and then established Beijing Borgward in 2016.
From 2016 to 2018, Borgward sold a total of 106,900 vehicles, with a cumulative loss of 4.014 billion yuan.
Foton Motor's net loss in 2018 was 3.575 billion yuan, of which Baowo Motor's loss accounted for 70%.
Under continuous losses, at the end of 2018, Foton Motor transferred 67% of Borgward Motors' equity to Changshengxing for 3.972 billion yuan.
Changsheng Xingye needs to repay the 4.271 billion yuan shareholder loan owed to Foton Motor in installments within three years from the date of completion of the equity transfer.
In 2019, UCAR announced that it would acquire a 67% stake in Baowo Automobile held by Changsheng Xingye at a price of 4.109 billion yuan.
In 2020, UCAR was implicated in the financial fraud incident of Ruixing Coffee and was unable to support Borgward Automobile.
In 2020, the sales volume of Baowo Automobile will only be 8,740, and in 2021, it will be cut to 3,612.
Since then, Baowo has gradually moved towards bankruptcy.
In December 2021, Foton Motor announced that the relevant assets of Beijing Baowo were seized by the Beijing No. 3 Intermediate People's Court, and the book value of the seized property was 2.209 billion yuan.
In January of this year, Foton Motor stated that Beijing Baowo had entered a state of suspension due to the depletion of funds and was unable to continue to maintain operations.
On April 8, Foton Motor announced that due to Beijing Baowo's financial depletion, it was unable to pay off due debts, and its assets were not enough to pay off all debts, so it applied for bankruptcy liquidation and submitted relevant applications to Beijing No. 1 Intermediate People's Court.
On April 23, Foton Motor announced that the Beijing No. 1 Intermediate People's Court ruled to accept Beijing Baowo's bankruptcy liquidation application.
Red Star News reporter Wu Danruo