On April 23, 2026, the Jinhua Intermediate People’s Court in Zhejiang Province issued a ruling that placed Huayi Brothers Media Corporation, once a dominant force in Chinese-language cinema for 32 years and known as "the first listed film company in China," under formal bankruptcy review. The court has initiated a preliminary restructuring process and appointed Zhong Lun Law Firm (Shanghai) and Zhejiang Zhiren Law Firm as interim administrators.
The immediate trigger for the bankruptcy restructuring was a matured debt of just 11.405155 million yuan. Creditor Beijing Tairuifeike Technology Co., Ltd. applied to the Jinhua court for restructuring and pre-restructuring on the grounds that Huayi Brothers was unable to repay its due debts, clearly lacked solvency, but still possessed restructuring value.
For a company that once generated annual revenues in the billions and saw its market capitalization approach 100 billion yuan, this debt of less than 12 million yuan seems almost negligible. Yet, it was this seemingly insignificant amount that ultimately broke the back of the once-mighty entertainment giant.
**I. Eight Years of Heavy Losses: A Steep Decline from 90 Billion to 5 Billion** Huayi Brothers’ collapse was not sudden. Since reporting its first annual loss in 2018, the company has been mired in losses for seven consecutive years. By the end of 2024, its cumulative losses exceeded 8.2 billion yuan. Recent performance forecasts indicate an estimated loss of 289 million to 407 million yuan for 2025. This brings total losses from 2018 to 2025 to at least 8.5 billion yuan.
Accompanying the profit collapse was a rapid evaporation of net assets. The company’s net assets plummeted from 8.55 billion yuan at the end of 2018 to just 361 million yuan by the end of 2024. By the third quarter of 2025, net assets had further dwindled to 263 million yuan, while the debt-to-asset ratio soared to 87.7%, far exceeding healthy corporate thresholds.
Even more striking was the capital market’s verdict. Huayi Brothers went public on the Shenzhen Stock Exchange’s ChiNext board in 2009, becoming the first privately-owned film company to list in mainland China, with an IPO price of 28.58 yuan per share. In 2015, its share price reached a historic high of 32.13 yuan, pushing its market cap past 90 billion yuan. As of April 23, 2026, however, its share price stood at just 1.97 yuan, with a market cap of approximately 5.47 billion yuan—a decline of over 94% from its peak.
**II. Cash Flow Exhaustion: How a Million-Yuan Debt Became the Final Straw** The reason a debt in the tens of millions could bring down Huayi Brothers lies in its years-long liquidity crisis. The bankruptcy filing merely reflects the stark financial reality facing the former industry leader.
As of April 1, 2026, the company had 34 frozen bank accounts, 22 of which held balances under 1,000 yuan. Overdue debts to financial institutions totaled approximately 56.399 million yuan, exceeding 10% of its audited net assets from 2024. Following the debt defaults, the company faces potential litigation, arbitration, and other cascading risks.
Previous self-rescue efforts have also faltered. On December 30, 2025, a judicial auction of 154 million shares held by controlling shareholder Wang Zhongjun was completed, with six bidders acquiring a 5.55% stake in the company. Alibaba Entrepreneurship Fund and Jack Ma also reduced their holdings via block trades that month, lowering their stake to below 5%. In February 2026, Wang Zhonglei was again restricted from high-consumption activities due to a 5.99 million yuan court claim. In preceding months, both Wang Zhongjun and Wang Zhonglei had faced multiple such restrictions, involving amounts ranging from 74.73 million yuan to as little as 580,000 yuan.
**III. Strategic Missteps: From Film Industry Leader to Capital Mismanagement** Huayi Brothers’ downfall cannot be attributed to a single debt. Jiang Han, a senior researcher at Pangoal Institution, noted, “The creditor’s restructuring application is not an isolated incident but a reflection of the company’s overall financial deterioration. More fundamentally, it represents a final reckoning for years of strategic errors.”
A key factor was the ill-fated shift toward “de-filmization.” At the height of its success, Huayi Brothers attempted to emulate Disney by pivoting toward IP licensing and location-based entertainment while aggressively expanding into internet and gaming sectors. The company poured billions into heavy-asset projects such as film-themed towns, which have payback periods of 10 to 15 years—completely at odds with the quick-return nature of film financing. Ultimately, vast amounts of cash flow became trapped, creating a vicious cycle where “film leverage was used to prop up real estate, only to be dragged down by real estate’s weight.”
The company’s capital operations also sowed the seeds of future trouble. In 2015, Huayi Brothers acquired a 70% stake in Dongyang Haohan—a company formed just one day earlier—for 756 million yuan, tying up celebrities like Li Chen and Feng Shaofeng. That November, it spent 1.05 billion yuan to acquire Dongyang Meila, 99% owned by filmmaker Feng Xiaogang, despite the target having a net asset value of negative 5,500 yuan. These two acquisitions, totaling about 1.8 billion yuan, laid the groundwork for future goodwill impairments amounting to billions.
**IV. The End of an Era: Feng Xiaogang No Longer to the Rescue** Feng Xiaogang has been integral to Huayi Brothers’ rise. Founded in 1994 by the Wang brothers, the company began investing in Feng’s New Year films such as “Sorry Baby,” “Sigh,” and “Big Shot’s Funeral” from the late 1990s onward, with both sides benefiting mutually. Wang Zhonglei once stated plainly, “Half of Huayi Brothers’ empire was built by Feng Xiaogang.”
But times have changed. The highly anticipated sequel “If You Are the One 3” struggled to reach 100 million yuan at the box office—a clear sign that the golden era of the “Feng Xiaogang + Huayi” partnership had ended. Although Huayi Brothers still participated in investments like “The Volunteers: To the War,” its stakes were limited, and returns were far from sufficient to reverse its losses.
**V. What Comes Next** As of this report, Huayi Brothers has not yet received formal notice from the Jinhua court accepting the restructuring application. Whether the company proceeds to pre-restructuring or full restructuring remains highly uncertain.
What is undeniable is that Huayi Brothers now stands on the brink of both delisting and bankruptcy. The company has explicitly warned that if restructuring fails, it faces the risk of being declared bankrupt. Should that occur, its shares would likely be delisted.
Huayi Brothers plans to release its audited 2025 annual report on April 29. Whether its net assets are negative will determine if the Shenzhen Stock Exchange imposes a delisting risk warning—often referred to as “starred and capped.”
The fall of Huayi Brothers symbolizes the end of an era. From dominating the entertainment industry to being unable to repay a minor debt, its story offers multiple lessons: unchecked capital expansion can destroy a company’s foundation; overconfidence in strategic transformation can lead it astray; and neglecting content while obsessing over heavy assets can drag a creative firm into an irreversible abyss.
The final act of Huayi Brothers’ survival drama has yet to be written. Regardless of the outcome, its story will stand as one of the most cautionary tales in the history of China’s private film and television industry.
Comments