A seafood processor and distributor in the prosperous coastal city of Ningbo is being forced to wind down its operations and sell its assets after being declared bankrupt.
But in a sign of changing attitudes to bankruptcy in China, Ningbo Jin Hong Aquatic Products Co. has been forced by court to sell five trademarks. The sale, on the online auction website operated by Alibaba, raised CNY 28,050 (USD 4,207, EUR 3,646) for the company’s trademarks, as ordered by Xiangshan County Court in the suburbs of Ningbo.
In 2018, the Xiangshan Court ruled in favor of an application by Xiangshan County Agricultural Finance Guarantee Co. to declare the company bankrupt. The court directed Zhejiang He Yi Guan Da Law Co. to take the case and ensure Jin Hong – which farmed and processed seafood while also exporting surimi – was wound up and its assets sold.
The company lost a lot of money in the past year, according to the court document announcing the sale of the trademarks, suggesting difficulty collecting payments from clients. Its financial situation worsened as a result of the COVID-19 related shutdowns in China last year. Creditors are unlikely to be paid what the court described as "hundreds of millions" in debt, the documents said.
“All that’s left is some equipment worth some millions of yuan, and de-fatted yellow croaker,” it said.
Trademarks developed by the bankrupted company were established in local retail circles, the document noted. The state-controlled press appears to be keen to promote the sale in order to encourage similar procedures in other bankruptcies.
The case appears to signal a shift in how China’s seafood processing industry and similar businesses are overseen by authorities in China. In recent years, China has sought to increase the ease with which companies can be liquidated, breaking with a long taboo about companies being allowed to fail for fears of job losses and resulting social instability. Despite being described as a “dragon head” – a company billed as a local champion by government – the firm was allowed to fail, whereas previously dragon heads could expect to be bailed out by local governments keen to protect jobs and livelihoods.
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