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After fading out of Lifan Technology (Group) Co., Ltd. (601777.SH, hereinafter referred to as Lifan Technology), Chongqing's former richest man Yin Mingshan has started his retirement life in a local retirement community. However, 1,000 kilometers away in Jiyuan, Henan, the "Jiyuan-made" Lifan electric cars that he personally witnessed rolling off the production line have been gathering dust for a long time, and the first judicial auction of Lifan's Jiyuan factory has also attracted no interest.

The legal entity of Lifan Jiyuan Factory is Henan Lifan New Energy Electric Vehicle Co., Ltd. (hereinafter referred to as Henan Lifan). On July 23, the first auction of Henan Lifan's asset package failed, and the second auction will be restarted on August 12. From the early layout of daring to be the first in the world to the end of the new energy vehicle wave, what enlightenment does the story of Henan Lifan have?

Written by Dahe Cailifang reporter Zhang Keyao and intern Lan Xiaoyu |

Wang Linlin | Editing

01/‍‍‍

The factory has been shut down for many years, waiting for a new owner

Henan Lifan is located in Jiyuan High-tech Zone, with Kexin Road to the north, Xinke Road to the west, Kegong Road to the south, and Xinming Road to the east. Recently, in order to understand the current situation of the company and more details, Dahe Cailifang reporters visited Henan Lifan on the spot.

Interestingly, Xinming Road was formerly known as Lifan Road. As of press time, Xinming Road was still marked as Lifan Road on the AutoNavi Map App and Tencent Map App. The Baidu Map App has been adjusted to Xinming Road, but the location of Henan Lifan's factory has been retained.

Henan Lifan North Gate

Henan Lifan South Gate

Henan Lifan West Gate

There are gates on the north, west and south sides of the Henan Lifan factory, with the words "Henan Lifan New Energy Electric Vehicle Co., Ltd." in front of each gate. The metal font of the company name in front of the north gate has fallen off, and there are simple food and beverage stalls on the west side of the north gate. A nearby cleaner told Dahe Cailifang reporters that these food and beverage stalls mainly serve workers in surrounding factories.

Food and beverage stalls on Kejian Road, Beimen, Lifan, Henan

Henan Lifan North Gate Kexin Road is in a semi-closed state

The workers from the surrounding factories mentioned by the cleaners are mainly from a factory to the north across Keyan Road from Henan Lifan. The north and south gates of Henan Lifan are located near Xinming Road. From the north and south gates, you can see construction machinery, construction waste and some factory buildings.

At present, there is only one security guard on duty at the west gate. A reporter from Dahe Cailifang consulted the factory in the name of an investment institution. The security guard said that he was from a local security company in Jiyuan and came to this factory in May 2023. The security guards of the original factory were disbanded at the beginning of this year. Before he arrived at the post, he heard that this factory had been shut down for many years. Now he is the only one on duty here. It is said that Henan Lifan has declared bankruptcy, and there are still equipment and vehicles in the factory. If you want to enter the factory, you must obtain the consent of the manager's lawyer.

A local person in Jiyuan told the reporter of Dahe Cailifang that Lifan had a good reputation before, and Henan Lifan had good production efficiency at the beginning, and many Jiyuan locals rushed to work there. The local government of Jiyuan also supported Henan Lifan's business. After all, Henan Lifan was a key project that year and attracted much attention. Some units were encouraged to purchase electric cars produced by Henan Lifan.

According to the decision of the Jiyuan Municipal People's Court of Henan Province, Qi Bo of Henan Langqi Law Firm was designated as the person in charge of the bankruptcy liquidation administrator of Henan Lifan. Dahe Cailifang reporter contacted Qi Bo to apply for access to the Henan Lifan factory area, but did not receive any response before the deadline.

02/‍‍‍

The ups and downs of Jiyuan's new energy vehicle industry

Public information shows that Henan Lifan was established in August 2014. It is the 24th factory of Lifan Technology (formerly known as Lifan Group) in the world and the first factory of Lifan Technology dedicated to the production of new energy electric cars.

In December 2014, Henan Lifan went into production, and the "Jiyuan-made" Lifan new energy electric cars 320E and 300E rolled off the assembly line. Yin Mingshan, then chairman of Lifan, attended the roll-off ceremony with government leaders. The official roll-off of the first batch of Lifan new energy electric cars was regarded by Jiyuan locals as "an important milestone in the automobile industry."

Judging from the industrial structure of Jiyuan at that time, there was room for imagination by attracting Henan Lifan to develop the new energy vehicle industry. After years of development, Jiyuan's traditional advantageous industries such as steel, nonferrous metals, and equipment manufacturing have begun to take shape and are highly correlated with the automobile industry.

According to Jiyuan's industrial planning at the time, with the commissioning of Henan Lifan, the construction of Jiyuan's local auto parts supporting industrial park and power battery production base will be accelerated. Focusing on the upstream and downstream industries of new energy vehicles, Jiyuan will further build cluster advantages, gradually form a complete industrial chain from auto parts processing to vehicle production and sales, and cultivate a 10 billion-level industrial cluster.

Lifan Group also attaches great importance to its layout in Jiyuan, Henan. Yin Mingshan not only attended a series of activities for the production of Henan Lifan, but also arranged for his son Yin Xidi to serve as the chairman of Henan Lifan. Lifan Group's 2014 annual report specifically mentioned the Jiyuan factory: "The new energy vehicle factory built by the company in Jiyuan, Henan has officially started production, marking the first company in the country that has both the qualifications for producing sedans and new energy electric vehicles to officially enter the low-speed electric vehicle industry."

Lifan Group disclosed the production situation of Henan Jiyuan Plant in its annual reports of 2015 and 2016. In 2015 and 2016, the designed production capacity of Henan Jiyuan Plant was 50,000 vehicles, and the production capacity was 20,000 vehicles during the reporting period, with capacity utilization rates of 25.27% and 13.83% respectively.

However, affected by the subsidy fraud scandal and other factors, after 2017, the new energy vehicles produced by Lifan Group no longer received financial subsidies, and car sales plummeted.

After that, Lifan Group encountered a liquidity crisis. Chongqing State-owned Assets joined hands with Geely Automobile to participate in its bankruptcy reorganization. Li Shufu took over through Geely's Manjianghong Fund. The Yin Mingshan family, who was once the actual controller of Lifan Group, gradually faded out, and Lifan Group was renamed Lifan Technology.

When the nest is overturned, can the eggs remain intact? According to the announcement of Henan Lifan's application for bankruptcy liquidation issued by Lifan Technology in March 2023, since 2020, Henan Lifan has no substantive business, is seriously insolvent and lacks the ability to continue operating, and has applied to the court for bankruptcy liquidation.

03/‍‍‍

Bankruptcy liquidation and debt repayment, the last resort

Dahe Finance reporter found that on July 22, Henan Lifan's asset package was listed on Alibaba Auction with a starting price of 98.9486 million yuan. However, after 24 hours of auction, on July 23, the first auction of Henan Lifan's asset package failed. The second auction will start at 10:00 on August 12, but the starting price has shrunk to 79.1588 million yuan.

Regarding the company bankruptcy liquidation process, Zhang Ying, director of the Crisis Relief and Bankruptcy Restructuring Legal Affairs Department of Shanghai Haoxin (Zhengzhou) Law Firm, introduced that first, the debtor or creditor applies to the court for bankruptcy liquidation. After the court accepts the application, it will appoint a bankruptcy administrator. The bankruptcy administrator will conduct an investigation into the debtor's assets and other circumstances, and accept the creditors' claims declaration. Within the statutory period, the company's assets will be ascertained and the company's debts will be determined. Then, a creditors' meeting will be held to report the administrator's investigation of the debtor's company assets and request the creditors' meeting to verify the claims.

"If the debtor is insolvent, has no restructuring value, and cannot reach a debt settlement with creditors, the court will rule to declare the debtor bankrupt." Zhang Ying said that the administrator will then convene a creditors' meeting to vote on the bankruptcy property valuation and distribution plan. After the resolution is passed, the administrator will sell the bankruptcy property in accordance with the above plan and distribute it to creditors based on the property realization value and distribution plan.

In fact, in the bankruptcy procedure, there are three disposal methods: settlement, reorganization and liquidation, and the specific methods need to be determined based on the situation of the corporate debtor.

Generally speaking, if the corporate debtor's assets are in good condition and its main business is relatively stable, and it is only temporarily experiencing a liquidity crisis and debt repayment difficulties, and the company's fundamentals are good in the medium and long term, the corporate debtor can negotiate with creditors and propose a settlement plan, such as debt extension, interest reduction, etc., to ultimately repay the creditors' corresponding claims; if the corporate debtor's management team or shareholders are dishonest or have poor operational capabilities, but the company's assets and main business are still valuable, new investors and management teams can be introduced to invest in the debtor and resume operations, and creditors can be repaid in accordance with the provisions of the reorganization plan; if there is neither the possibility of reconciliation nor the value of reorganization, liquidation can only be adopted to repay debts by selling assets.

Zhang Ying said that when an enterprise reaches the stage of bankruptcy liquidation, it has reached a stage of last resort, especially for manufacturing enterprises. The debtor's assets will basically be sold at a discount, and relevant taxes during the bankruptcy period must also be paid. New hidden costs may be incurred when assets are transferred or changed. According to the repayment ratio, there will not be much value left in the hands of creditors in the future.

04/‍‍‍

Attracting industrial enterprises should pay attention to three aspects

In 2014, when Henan Lifan was established and put into production, new car-making forces such as Weilai and Xiaopeng were just established. In July and December 2015, Ideal Auto and Leapmotor were established respectively. In June 2018, Nezha Auto was established by Hozon New Energy. Today, Weilai, Xiaoli, and Leapmotor have all entered the capital market and become bigger and stronger, and Nezha Auto is striving for an IPO on the Hong Kong stock market.

Looking back, at a time when the concept of the domestic new energy vehicle industry was greater than its substance, Jiyuan introduced and established Henan Lifan to cultivate the new energy vehicle industry, showing great vision and courage to be the first in the world. Unfortunately, it was hindered by the poor performance of its "teammates" and collapsed on the eve of the arrival of the new energy vehicle wave.

Some market insiders believe that the closure of Henan Lifan has certain reference value for attracting new energy vehicle industry-related enterprises in various parts of the country, specifically in the following three aspects:

First, do a good job of background research beforehand. Lifan started out as a motorcycle manufacturer, and Yin Mingshan became the richest man in Chongqing because of this. However, after crossing over to car manufacturing, there were problems in R&D investment, and the most direct manifestation was the lack of product strength. Therefore, when introducing Lifan, we must have a comprehensive understanding of Lifan's situation, so that we can focus on key tasks in stages in the subsequent project promotion.

Second, we should attach importance to process risk control. According to the civil ruling of the People's Court of Jiyuan City, Henan Province, Henan Lifan had applied for the production and registration of low-speed four-wheel electric vehicles to carry out business, but pure electric passenger vehicles were not approved. Henan Lifan terminated the application for electric passenger vehicle qualifications at the end of 2016. In addition, Lifan shares have also encountered problems such as subsidy fraud and liquidity crisis. These process risks need to be paid special attention to because they will affect the sustainable operation ability of the next project.

Third, timely disposal of project risks. As mentioned above, there are three types of bankruptcy procedures: settlement, reorganization, and liquidation. If timely actions are taken, settlement and reorganization can minimize losses, while liquidation is the most helpless outcome for enterprises and local areas.

Regarding the bankruptcy and liquidation of Henan Lifan, a reporter from Dahe Cailifang called the public disclosure office phone number of Lifan Technology and sent an interview outline to the official email address as requested by the other party. No reply was received before press time.