A Chinese court has ordered a unit of debt-laden dry bulk goods shipper Chang Jiang Shipping Group Phoenix Co. Ltd. to liquidate its assets, displaying further evidence of the troubles faced by the country's beleaguered shippers.
The unit, whose Chinese name is translated as Chang Jiang Jiaotong Keji, is unable to pay its debt or stay solvent, prompting three of its creditors to apply to the Wuhan intermediate court to liquidate its assets, Chang Jiang Shipping said in a filing on the Shenzhen stock exchange.
The unit, in which Chang Jiang Shipping owns an 89 percent stake, has ceased to operate.
China's shipping sector has been plagued by overcapacity since the global financial crisis because new vessels ordered before the downturn have flooded the market.
China Rongsheng Heavy Industries Group, the country's largest private shipbuilder, posted a larger loss in 2013, while China COSCO Holdings , the largest Chinese bulk shipping company, eked out a profit only after disposing of assets.
Chang Jiang Shipping has also had its share of woes.
It has been sued for loan repayment by five banks, including China Merchants Bank Co and China Minsheng Banking Corp. It also faces lawsuits from the leasing arm of the Industrial and Commercial Bank of China and China Petroleum and Chemical Corp for unpaid bills.
The company, a subsidiary of state-owned Sinotrans & CSC Holdings, is expected to report a third straight year of losses for 2013, with its net loss widening to 43 billion yuan ($6.9 billion) from 18.8 billion yuan in the previous year.
Any China-listed company that records three consecutive years of losses faces the possibility of being delisted, though Chang Jiang might be spared as it is holding bankruptcy restructuring talks with creditors, Sinotrans spokesman Xu Jiandong said in February.
($1 = 6.2005 Chinese yuan)
(Reporting by Meg Shen in Hong Kong; and Lee Chyen Yee in Singapore; Editing by Dale Hudson)