Guangxi Nonferrous Metals Files First Chinese Interbank Bankruptcy

by San Antonio Attorney

Guangxi Nonferrous Metals Group, a metal producer owned by the Chinese state, recently declared bankruptcy, marking the first bond issuer of China to fail in operation.

Guangxi Nonferrous Metals failed to create a reorganization plan six months after the court order was released, according to an official statement released by the court of Nanning.  The grace period for restructuring came to a close and Guangxi Nonferrous Metals eventually declared bankruptcy.

Guangxi Nonferrous Metals failed to make a payment worth 500 million Yuan based on a three year private placement note, according to a recent announcement last April.  Guangxi Nonferrous Metals pointed out that the cause of its troubles was the default of consecutive losses and how it already underwent procedures of bankruptcy reorganization.

Two months ago, Shanghai Clearing House released a statement that the interbank clearing house was prepared for a settlement and cleared of its financial obligations.  This was done after consecutive losses became insolvent.

Guangxi Nonferrous Metals firm possesses debt that total up to 14.5 billion yuan, thus providing an asset-to-liability ratio of 216.77 percent, according to Caixin.

Guangxi Nonferrous Metals’ creditors include Minmetals International Trust Co, Shenwan Hongyuan Securities and China Development Bank.  According to analysts, bankruptcy ws anticipated by the market as it did not have a large impact on the bond market.

In 2015, Guangxi Nonferrous Metals expressed their inability to repay a midterm note worth 1.363 billion Yuan but managed to comply with the use of the capital from China Development Bank.

For the past year, China has experienced a surge of default by its state-owned companies.  But none of these companies have undergone liquidation.  Some are still embroiled into negotiations, such as the cause of Dongbei Special Steel Group, who defaulted on nine bonds with the creditors of the Liaoning Provincial Government.

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