Financing Is Difficult To Lead To Excessive Debt Of Shandong Enterprises

- Mar 01, 2019-

On December 11, Shandong Qingdao Chengyang Development and Investment Group Co., Ltd. issued a debt collection announcement.

 

Among them, Qingdao Xiyingmen Double Camel Tire Co., Ltd. was included in the collection list.

 

According to incomplete statistics, the total debt of the company has reached 100 million yuan so far, and it also provides guarantees for a number of large loans.

 

Some insiders worry that if the double camel tires lose their ability to repay, they will go bankrupt.

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Indebtedness leads to bankrupt

 

Throughout the bankrupt Shandong enterprises, Tire World Network found that most of their capital chains were broken and unable to repay high debts.

 

On November 26, the application for bankruptcy reorganization of Shandong Dahai Group Co., Ltd. was accepted by the court.

 

As of the end of October 2018, the total assets of the Group were 5.089 billion yuan; the total liabilities amounted to 5.323 billion yuan, and the asset-liability ratio was 105%; the balance of external guarantees was 2.467 billion yuan.

 

On July 2, 14 companies including Shandong Hengyu Rubber Co., Ltd. entered the bankruptcy reorganization process.

 

As of May 2018, the total assets of Hengyu Rubber were only 1.997 billion yuan, and the total liabilities reached 2.425 billion yuan.

 

In addition to high debt, the biggest feature of these bankruptcy reorganization enterprises is that there are a large number of mutual guarantees and cross guarantees.

 

Financing is difficult to cause bad results

 

Some insiders have revealed that mutual security between enterprises has led to excessive debt. What lies behind all this is the difficulty of financing.

 

According to reports, for traditional manufacturing, banks are the most important financing channel.

 

However, in the bank's credit regulations, most of the assets are required to be mortgaged, and the asset size limits the credit limit.

 

Most of the tire enterprises in Shandong have limited mortgage assets, and mutual insurance has established a guarantee chain, which has become a last resort choice.

 

In addition, the bank's ex-gratify credit system has also helped, and some companies have used their vulnerabilities to review difficulties and obtain credits that should not be obtained.

 

According to the data, a donation of 300 million yuan from Shandong Dahai Group came from a bank in Ningxia.

 

Some bank staff said that mutual security and ex-gratify credit are the terrible consequences of financing difficulties.

 

He said that when a bank suddenly makes loans or reduces loans, enterprises will be forced to embark on a vicious circle of tight capital chains.

 

In the end, these over-indebted companies have become vulnerable to changes in the external environment and business conditions.