A court ruling Jinli bankruptcy news brings Jinli this enterprise into everyones vision, although confirmed by Jinli, only accept bankruptcy applications, not rulings, but Jinli did enter the bankruptcy process. How can mobile phone manufacturers, which once shipped nearly 40 million units a year, step by step step step into bankruptcy? How did Liu Lirongs chess game end in failure? Is Saipans gambling or over-marketing the trigger of the Jinli crisis?
Bankruptcy liquidation or bankruptcy reorganization?
According to the Beijing News, on December 10, 2018, the Intermediate Peoples Court of Shenzhen City, Guangdong Province, accepted the bankruptcy liquidation application filed by the applicant, Shenzhen Branch of Guangdong Huaxing Bank Co., Ltd., against the applicant, Shenzhen Jinli Communication Equipment Co., Ltd.
According to professionals, this means that Jinli has entered bankruptcy proceedings, but whether it wants to go into bankruptcy liquidation or bankruptcy reorganization still needs to be decided.
The so-called bankruptcy reorganization, if the reorganization is successful, then the company may be reborn, if the reorganization is unsuccessful, it is necessary to carry out bankruptcy liquidation. Bankruptcy liquidation refers to the liquidation, evaluation, disposal and distribution of bankruptcy property after the company goes bankrupt and the liquidation team takes over the company.
It is said that if Jinli carries out bankruptcy restructuring, its debtors can recover 80% of the debt, and then carry out bankruptcy liquidation, the people without debt mortgage can only recover 20% of the creditors rights. Big creditors have been hoping for restructuring.
As early as July this year, Jinli insiders said that by the resolution of the shareholdersmeeting, Jinli set up a restructuring group, which will formulate a restructuring plan and sign a restructuring agreement with investors to publish the details of the restructuring. At that time, the investor was a registered capital of more than 80 billion yuan, strong, but did not disclose the identity of the investor.
Until October, Golden Cube also met regularly with representatives of creditors rights, known as Liu Lirong, and agreed on a restructuring plan.
On November 23, the Golden Cube said that the meeting of Golden Limited Financial Creditors was held and more than 60 delegates attended the meeting. At the meeting, everyone had confidence in the restructuring of Jinli and clearly expressed their willingness to support it.
However, there was no news of Jinlis reorganization until December 10 when the court accepted its bankruptcy liquidation application.
However, the Golden Cube said that bankruptcy reorganization is still the direction.
Jinli Debt Ten Billions
According to public information, on November 28, 2018, Jinlis first meeting of operating creditors disclosed that the total liabilities of Jinli as at August 31, 2018 were 20.253 billion yuan, including 19.359 billion yuan in financial and operational claims and 648 creditors. Many of the creditors are listed companies, such as Euro-African Science and Technology, Vico Jinhua, Shentianma, etc.
It is understood that not only the suppliers are owed, but 244 Jinli employees have applied for arbitration. The average salary owed is more than 110,000 yuan, and the total amount owed is 28 million yuan.
The main assets of Jinli Group are Weizhong Bank Equity, Nanyue Bank Equity, Jinli Building, Dongguan Industrial Park, Times Science and Technology Building and Anhui Building. The book value of these assets is 2.573 billion yuan, and the market value is estimated to be 7.51billion yuan. Most of these assets have been mortgaged and pledged, or sealed up and frozen.
According to the investigation and control system of the Shenzhen court and the national court, the property under the name of the person being executed is investigated. The Shenzhen Intermediate Peoples Court has taken a number of enforcement measures, including four vehicles under the name of Jinli Communication and one vehicle under the name of Liu Lirong.
Liu Lirongs shares in eight companies were frozen on a waiting basis, and the shares of four companies held by Jinli Communications Equipment Company were frozen on a waiting basis. At the same time, 26 properties of Jinli Communications Equipment Company were also frozen on a waiting basis.
Not only that, Liu Lirong has also been listed as a dishonest person to be executed and restricted to high consumption. The Intermediate Peoples Court of Shenzhen issued a judgment on October 26. Liu Lirong repaid the principal and interest of the applicants loan totaling 153 million yuan.
In addition, Liu Lirong reimbursed the applicants bank acceptance bill advances with a total of RMB 510.16 million. According to the court, the specific case of the breach of trust is that the person who has the ability to perform and refuses to perform the obligations established in the effective legal documents.
After the break of Jinlis capital chain, Jinli Dongguans factory dismissed its employees. In addition to special circumstances, such as female workers who were injured during pregnancy, childbirth and breast-feeding, as well as during work and engaged in occupational hazards who did not undergo pre-job occupational health examination, they were not included in the scope of negotiating the termination of labor contracts. Others will have to complete the work of negotiating the termination of the labor contract by the end of April this year.
Employees who are unwilling to accept the termination of labor contracts through consultation shall be executed in accordance with the companys policy of suspension and rest.
Then President Jinli went into the state of layoffs.
Does gambling lead to or over-marketing?
How can mobile phone manufacturers, which once sold 40 million units a year and even ranked in the top three of the domestic mobile phone rankings, fall to the brink of bankruptcy? How can Liu Lirong, a successful entrepreneur, be listed on the list of dishonesty and many assets frozen for mortgage?
At the end of last year, it was rumored that Liu Lirong had lost 3.4 billion yuan in gambling and more than 3 billion yuan in gambling. Although the Golden Cube has repeatedly denied it. Later, the interface revealed that Liu Lirong lost more than 10 billion yuan in Saipan gambling, and the number of embezzlement of public funds may be about 6 billion.
However, Liu Lirong later told the Securities Times that he did gamble in Symbian and lost, but lost more than one billion yuan. It also acknowledges the embezzlement of more than one billion yuan of public funds.
Gambling may be the trigger to overwhelm Jinli. Besides gambling, Jinlis marketing expenses in the past two years are also one of the criticisms.
After the outbreak of Jinlis capital chain problem at the beginning of this year, Liu Lirong said it was due to the excessive marketing and investment costs in 2016-2017. Since Yu Lei joined in June 2015 to take charge of Jinlis domestic marketing, Jinli has entered a similar OV mode in marketing, and has been crazy to smash ads. Please star endorsement: Feng Xiaogang, Shawn Yue, Joker Xue, Liu Tao and other star endorsements are invited to sponsor the hit variety show.
It is understood that Jinli M6/M6Plus has sponsored Lets Fight, True Voice, Laugh Ao Jianghu, Four Famous Sponsors, Crossing Borders Song King and Tonight Bailemen. At the beginning of 2017, according to Jinlis plan, in 2017, about 1.9 billion RMB will be invested in S/M series for promotion and publicity, which will be named as various popular variety shows.
Liu Lirong also revealed that Jinli spent more than 6 billion yuan on marketing from 2016 to 2017.
Put a lot of money into advertising, but mobile phone sales do not match it. Data from GfK showed that in 2017, the domestic sales of Jinli mobile phone ranked seventh, and 14 million 940 thousand mobile phones were sold. This is a far cry from Liu Lirongs domestic target sales of 30 million units at the beginning of the year and the challenge of 38 million units. As for overseas sales, Jinli has not yet announced it.
Liu Lirong once said in an interview with the media that mobile phone manufacturers, including Jinli, can only be safe if they achieve a global annual sales of 100 million units.
In addition to huge marketing, Jinli also invested abroad. In July 2017, Liu Lirong said that Jinli would invest heavily in Chongqing, and the total investment in the next investment is expected to reach 5 billion yuan.
In addition, there is the Jinli Building. According to Netease Science and Technology, Jinli bid 710 million yuan in 2014 for the right to use T102-0248 plots in Qianhai Shenzhen-Hong Kong Modern Service Cooperation Zone in Shenzhen, covering 5776.77 square meters. Jinli wants to build a Jinli Building here. Construction of the building began in November 2015. It took one year to seal the roof in October 2016, but the decoration is still in progress.
External analysis of Jin Ligai Building is also a considerable expenditure. Netease Technology learned from Jinlis high-level that apart from 710 million yuan of land, building costs about 1 billion yuan.
However, Liu Lirong later said in an interview with the media that he did not attribute the responsibility to the marketing expenses, after all, every marketing expense was approved by his signature. He disclosed that the reason for todays situation is essentially that Jinli Mobile has been losing money for many years. From 2013 -2015, Jinli had an average monthly loss of not less than 100 million, while the monthly loss in 2016 -2017 was not less than 200 million.
This means that in the era of smartphones, Jinli not only lost money every month, but also spent a lot of money on marketing, plus personal gambling and embezzlement of public funds, becoming the last straw to overwhelm Jinli.
Combing the Outbreak Time of Jinli Crisis
In November 2017, Ophiguang applied for the preservation of Jinli.
On December 14, 2017, the stock price of Ofi Technologies plunged by more than 7% and its market value shrank by 4.3 billion yuan. It is rumored that Liu Lirong, chairman of Jinli, lost hundreds of millions of dollars in Macau gambling, which may lead to bad debts of Ofi Technologies.
On the afternoon of December 14, 2017, Jin Li issued a statement, purely rumors, and exposed screenshots of Liu Lirongs circle of friends, Liu Lirong and suppliers and bankers to refute rumors;
On January 16, 2018, Netease Technologies exclusively disclosed that 41.4% of Liu Lirong, chairman of Jinli, had been frozen by the court for two years.
On January 31, 2018, Liu Lirong, chairman of Jinli, accepted an interview with the Securities Times and admitted that there was a large capital gap. He could abandon his control right if three steps were necessary to solve the financial difficulties.
On February 1, 2018, Netease Technologies exclusively disclosed that Jinli owed 10 billion yuan to its suppliers; Jinming Electronics, Jinzhuo Electronics and other subsidiaries of Netease fell into debt disputes and were frozen;
On Feb. 7, 2018, the balance of accounts receivable of supplier Offel Technologies for Jinli was 626.017 million yuan, and the delivery of goods to Jinli was stopped.
On March 16, 2018, Netease Technologies exclusively reported that Jin Li had been seeking core employees to negotiate, signed a contract to the new company, Shenzhen Zhipu Technology Co., Ltd., and renegotiated the contract. From January 2018 to March 12th 2018, Shenzhen Zhipu made seven changes. However, due to financing problems, investors disapproved and the company ran aground.
On March 29, 2018, Jinli Dongguan Factory began to dismiss some of its employees, demanding that the work of negotiating the termination of labor contracts be completed by the end of April.
On April 7, 2018, Yulei Weibo, Vice President of Jinli, wrote an article confirming that Jinli did encounter a crisis in the capital chain, but was actively producing self-help, hoping that the media would not fall into the ground and support Jinli more.
On April 10, 2018, Jinli Shenzhen Headquarters and Beijing Research Institute began to lay off 50% of the staff.
On May 16, 2018, there was news that Jin Li had acquired the background of state-owned enterprises to take over. Jin Li expressed his intention, but it was not finalized.
On May 23, 2018, Jinli held a meeting of supplier creditors, with more than 50 suppliers present. He Dabing, Chief Financial Officer of Jinli, informed that Jinli was introducing a company with strong financial strength to acquire and restructure Jinli in an all-round way.
On May 23, 2018, Jinlis actual debt exceeded 20 billion yuan.
On July 14, 2018, Jin Li sent out the reorganization news. He will formulate a reorganization plan, sign a reorganization agreement with investors, and announce the details of the reorganization. On November 23, 2018, Golden Cube said that the meeting of Golden Limited Financial Creditors was held and more than 60 delegates attended the meeting. At the meeting, everyone had confidence in the restructuring of Jinli and clearly expressed their willingness to support it. On November 23, 2018, Interface reported that Liu Lirong lost 10 billion yuan in Saipan gambling. On November 26, 2018, Liu Lirong accepted an interview with the Securities Times, admitting that Symbian lost billions of dollars in gambling. On December 10, 2018, the Shenzhen Intermediate Peoples Court of Guangdong Province has accepted the bankruptcy liquidation application filed by Shenzhen Branch of Guangdong Huaxing Bank Co., Ltd. to Shenzhen Jinli Communication Equipment Co., Ltd. Source: Responsible Editor of Netease Science and Technology Report: Wang Fengzhi_NT2541
On July 14, 2018, Jin Li sent out the reorganization news. He will formulate a reorganization plan, sign a reorganization agreement with investors, and announce the details of the reorganization.
On November 23, 2018, Golden Cube said that the meeting of Golden Limited Financial Creditors was held and more than 60 delegates attended the meeting. At the meeting, everyone had confidence in the restructuring of Jinli and clearly expressed their willingness to support it.
On November 23, 2018, Interface reported that Liu Lirong lost 10 billion yuan in Saipan gambling.
On November 26, 2018, Liu Lirong accepted an interview with the Securities Times, admitting that Symbian lost billions of dollars in gambling.
On December 10, 2018, the Shenzhen Intermediate Peoples Court of Guangdong Province has accepted the bankruptcy liquidation application filed by Shenzhen Branch of Guangdong Huaxing Bank Co., Ltd. to Shenzhen Jinli Communication Equipment Co., Ltd.