Xi Linmen Health Sleep Technology Co., Ltd. (Xi Linmen), known as the “number one in Chinese mattress industry,” has recently plunged into a financial storm once again. The company revealed a financial turmoil after one of its subsidiary companies had approximately 100 million yuan illegally withdrawn. Now, it faces sudden debt disputes amounting to a staggering 560 million yuan, raising doubts in the market about its internal management chaos and financial black hole.
On May 11, Xi Linmen announced that the company was involved in two major lawsuits. One of them is from Zhejiang Hongke New Materials suing Xi Linmen and its subsidiary Xi Yue Furniture, demanding the repayment of about 460 million yuan of overdue loans and interest. The other lawsuit is from Tangshan Yintong Pawn suing Xi Linmen’s controlling shareholder Huayi Smart Manufacturing, seeking to recover approximately 103.8 million yuan of overdue loans and interest. The total amount in these two cases reaches 563.8 million yuan.
It is worth noting that both loans were due at the end of March this year, coinciding with Xi Linmen’s previous disclosure of the “100 million yuan illegally withdrawn” incident. Currently, some or even all of the funds are overdue.
However, Xi Linmen has emphasized that these loans did not go through the company’s formal approval process, the company did not authorize the signing of relevant documents, nor did it receive the so-called loan funds, suggesting that the incident may involve irregular operations.
In addition to the debt disputes, the funding issues of the company’s controlling shareholders and related parties continue to deteriorate. As of April 25, the actual controller Chen Ayu and related parties still have about 384.5 million yuan of non-operating loans outstanding, and there is also approximately 470 million yuan in irregular guarantees. The company had also voluntarily frozen about 900 million yuan in funds for self-preservation.
With a series of negative news impacting the company, Xi Linmen has been subject to “ST” (other risk warning) since April 28, and its stock has been continuously hitting limit-down for several days. On May 12, the company’s stock price dropped to 7.98 yuan per share, reflecting a decline of over 60% since the beginning of this year.
In fact, this storm had already erupted at the end of March. On the night of March 27, Xi Linmen suddenly announced that some of its subsidiary’s bank account funds had been illegally transferred, and some accounts had been protected and frozen. Upon this news, market confidence swiftly collapsed, causing the company’s stock price to plummet for several days, with the company’s market value evaporating by nearly 1 billion yuan in a short period.
Subsequently, Xi Linmen issued multiple announcements accusing its controlling shareholder Zhejiang Huayi Smart Manufacturing Co., Ltd. of using loan transfers and factoring financing to occupy the company’s funds, damaging the company’s interests.
The company also filed lawsuits to hold the controlling shareholder and persons acting in concert accountable. According to the announcement, the preliminary estimated amount involved in the case has reached 478 million yuan, and the case has been accepted by the court.
Regarding the “100 million yuan illegally withdrawn” incident, an insider from Xi Linmen had previously told Pengpai News that the identities of the individuals involved had not been finally confirmed, and further announcements from official sources were awaited.
Public records show that Xi Linmen was founded in 1984 and is the first listed company in the Chinese mattress industry, specializing in promoting healthy sleep products. It was once referred to as the “number one in Chinese mattress industry.” However, the company is now facing criticisms and doubts from the public due to its financial black hole, irregular occupation of funds, and massive debt explosions, showcasing its governance and risk control capabilities in a negative light.