Creditors of Debt-Ridden Xiwang Group Approve Settlement Plan

Creditors of debt-ridden corn-to-steel processing conglomerate Xiwang Group Co. Ltd. on Tuesday approved a draft settlement proposal to repay some of its 16.7 billion yuan ($2.36 billion) of liabilities, marking another step forward in efforts to repay bondholders and save the privately owned company from liquidation.

Close to 90% of 374 creditors who attended the meeting, which was convened over the internet, voted in favor of (link in Chinese) the offer put forward by Xiwang’s court-appointed administrator charged with overseeing the company’s affairs, people familiar with the matter told Caixin. The 335 who accepted the plan are owed about 12.4 billion yuan, or 86.4% of the company’s total unsecured debts, the sources said.

The administrator will now submit the draft settlement proposal to the court for approval, according to a statement from Shenzhen-listed Xiwang Foodstuffs Co. Ltd., a subsidiary of Xiwang Group, released after the meeting.

Xiwang, one of the biggest privately owned companies in the industrial eastern province of Shandong, filed for conciliation (link in Chinese) under China’s bankruptcy law last month at a court in Zouping city where it’s headquartered, saying that it could not repay maturing borrowings and its assets were insufficient to pay off all of its debts. Under the country’s bankruptcy laws, Xiwang is allowed to apply for a compromise or settlement of its debts with creditors, and it submitted a proposal to the court.

Court approval

On Oct. 24 last year, the company failed to repay 1 billion yuan in short-term commercial paper that had matured, triggering defaults on four other debt securities amounting to 2.3 billion yuan. According to Xiwang’s 2019 financial statement, the company had total assets of 15.5 billion yuan with liabilities of 16.7 billion yuan at the end of last year. As of Thursday, a total of 473 creditors have submitted claims against Xiwang Group for 20.2 billion yuan, according to documents seen by Caixin. But the 410 creditors accounting for 13.9 billion yuan of the total have yet to be verified by the company’s administrator.

Zhang Yuzhe contributed to this report.

An earlier version of this story incorrectly referred to Xiwang as bankrupt and stated that it had filed for bankruptcy. The story has been corrected to reflect that Xiwang has filed for conciliation under China’s bankruptcy law.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Nerys Avery (nerysavery@caixin.com)

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