China’s real estate giant, Aoyuan Group, issued a risk warning on September 5, revealing a dire liquidity crisis with default debt reaching a staggering 42.774 billion yuan and litigation-related amounts soaring to 66.689 billion yuan. At the same time, Aoyuan Group faced a massive loss of 8.814 billion yuan in the first half of the year, with insufficient cash to cover its debts, putting the company’s survival at stake.
The company disclosed a significant risk warning for the first time, shedding light on the serious debt crisis it currently faces. The announcement indicated that the company is currently mired in a liquidity crisis phase, accumulating approximately 42.774 billion yuan in overdue debt principal, shocking the market with the scale of defaults.
The specific default debt includes various financing instruments such as bonds issued to professional investors in 2020 amounting to 377 million yuan, Aoyuan-Fly First Asset Support Notes Priority Phase I at 129 million yuan, and the first phase of Aoyuan Group’s supply chain accounts payable directed asset-backed notes trust priority at 126 million yuan.
Even more serious is the approximately 66.689 billion yuan in pending litigation involving Aoyuan Group, where financing-related litigation amounts to around 569.98 billion yuan, accounting for over 80%, and non-financing-related litigation amounts to about 96.91 billion yuan. In addition, the company has 191 instances of default information involving a total amount of 47.66 billion yuan, leading to a complete collapse of the corporate credit system.
Faced with such severe debt defaults and litigation risks, Aoyuan Group will encounter multiple legal consequences, such as default interest payments, frozen bank accounts, seizure of core assets, and forced auction execution, severely restricting normal business operations.
Compounding the debt crisis is the sharp deterioration in Aoyuan’s operational performance. According to the 2025 interim performance report, Aoyuan achieved approximately 4.465 billion yuan in operating income in the first half of the year, a 5.7% year-on-year decrease; with a gross loss of a staggering 2.841 billion yuan, a 1299.5% year-on-year increase; and a shocking gross loss ratio of 63.6%.
More alarmingly, the total loss for the period is 9.48 billion yuan, compared to a profit of 22.1 billion yuan for the same period in 2024, representing a reversal in profit and loss of over 31.5 billion yuan; and a shareholder net loss of around 8.814 billion yuan, while the net profit for the same period in 2024 was approximately 22.312 billion yuan, showcasing a difference of over 31.1 billion yuan in year-on-year comparison.
The cash flow situation has also severely deteriorated. As of June 30, Aoyuan’s bank balance and cash amounted to only about 327 million yuan, with restricted bank deposits at around 1.97 billion yuan. The group’s total bank loans, other borrowings, senior notes, and bonds amount to 728.1 billion yuan, with a significant 567.68 billion yuan due within the next twelve months, imposing immense pressure for short-term debt repayment.
Facing an existential crisis, Aoyuan Group stated that it is fully committed to resolving debt risks. Currently, the group is at a critical juncture of survival. The success in resolving the liquidity crisis and making substantial progress in debt restructuring negotiations will directly determine whether this once-prominent real estate company can avoid bankruptcy and liquidation.
Against the backdrop of the deep adjustment in China’s real estate industry, Aoyuan Group’s debt crisis reflects the liquidity challenges and operational pressures facing the industry as a whole.