The Shaanxi billion-dollar steel enterprise Dongling Group recently announced bankruptcy, shaking the industry, with reports indicating that the bankruptcy of Dongling Group will involve 18,000 employees.
According to the information released by the China Corporate Bankruptcy and Restructuring Cases Network on July 25, 2024, Case No. (2024) Shan 03 Bankruptcy Application 22 showed that Dongling Group has been applied for bankruptcy restructuring by Shanxi Liberty Software Co., Ltd., with the proceedings conducted by the Baoji Intermediate People’s Court in Shanxi Province.
Information on Case No. (2024) Shan 03 Bankruptcy Application 23 published on the website revealed that Dongling Group’s subsidiary, Shanxi Dongling Materials Co., Ltd., also faced bankruptcy petition filed by Baoji Jintai District Tongshengchang Business.
On July 30, the notice on Dongling Group’s creditor reporting published by the China Corporate Bankruptcy and Restructuring Cases Network designated Beijing Guantao (Xi’an) Law Firm as the bankruptcy administrator for Dongling Group. Creditors of Dongling Group are required to report their claims to the bankruptcy administrator of Dongling Group Limited by September 27, 2024.
As reported by the “Huaxia Times” on August 3, the bankruptcy of Dongling Group has taken many by surprise, as the company was previously known for being a billion-dollar private enterprise and part of the “Top 500” companies. Furthermore, the company’s bankruptcy was attributed to overexpansion, market changes, and poor management, according to industry experts.
Critics also pointed out that Dongling Group’s bankruptcy was due to its deep involvement with the real estate sector. Despite being a top player in steel production with sales exceeding 10 million tons, the company’s real estate investments had been declining for years. Records show that the group injected 1.3 billion yuan into the long-stalled Yinfeng Center project in 2018, had its accounts frozen due to contract disputes with an elevator supplier in 2020, and faced economic disputes with a construction company.
The Vice Chairman of the China Enterprise Capital Alliance, Bai Wenxi, mentioned that Dongling Group’s bankruptcy could damage its brand image and market reputation, affecting the local and national economy. Economist and financial expert Yu Fenghui added that the bankruptcy of Dongling Group, as a large private enterprise, could have cascading effects on the entire economic ecosystem, potentially leading to job losses for its 18,000 employees and causing fluctuations in the financial market.
Established in 1980 as a village collective enterprise, Dongling Group broke the billion-yuan revenue mark in 1994 and formally established itself in 1996 after years of development. The conglomerate operated in various sectors, including steel and non-ferrous metal smelting, mineral resources, energy, and supply chain services, making it one of the largest private zinc smelting enterprises in western China.
According to data from Tianyancha as of August 2, Dongling Group is entangled in 145 legal cases involving disputes such as sales contracts and loan agreements, with total execution amounts reaching 1.27 billion yuan.