A creditor has formally applied for the bankruptcy restructuring of Huayi Brothers Media Corporation, following cumulative losses of 8.2 billion yuan over seven years.
Huayi Brothers announced that the Intermediate People’s Court of Jinhua, Zhejiang Province has accepted a restructuring application filed by creditor Beijing Tairui Feike Technology Co., Ltd., initiating a preliminary restructuring process.
The debt originates from an advertising contract dispute amounting to approximately 11.405 million yuan, which has been overdue for nearly five years. Notably, in February this year, Huayi Brothers disclosed that the two parties had reached a settlement agreement. It remains unclear why the creditor has now taken further legal action.
When contacted, a representative from Tairui Feike declined to comment, while Huayi Brothers’ investor relations department stated that the company would proceed with the restructuring process in accordance with legal requirements.
Once regarded as a leading player in China’s entertainment industry, Huayi Brothers played a pivotal role in pioneering commercial New Year blockbusters. At its peak, the company’s market capitalization approached 90 billion yuan. Today, however, it stands on the brink of financial collapse.
As of the third quarter of 2025, Huayi Brothers reported a debt-to-asset ratio of 87.65%, with cash reserves of only 53.49 million yuan against short-term liabilities exceeding 500 million yuan. Since 2018, the company has accumulated losses of more than 8.5 billion yuan. Both its film production and real-world entertainment operations have largely stalled, and the equity holdings of founders Wang Zhongjun and Wang Zhonglei have been fully frozen.
The restructuring application stems from an advertising contract dispute with Tairui Feike. According to a legal document, the payable amount had been overdue for over a year by the end of 2022, indicating that the debt has remained unpaid for roughly five years.
Although the two parties reached a settlement earlier this year, legal experts suggest that Huayi Brothers may have failed to fulfill the terms of the agreement, prompting the creditor to seek court-led restructuring as a last resort.
Huayi Brothers has been grappling with a liquidity crisis for years. As of September 2025, the company’s total assets stood at 2.617 billion yuan, while total liabilities reached 2.294 billion yuan, resulting in shareholder equity of only 322 million yuan. The firm’s cash position is critically low, with short-term debt obligations far exceeding available funds.
In December 2025, Huayi Brothers disclosed overdue debts to financial institutions totaling 52.5 million yuan, exceeding 10% of its audited net assets from the previous year.
The root of the crisis lies in the company’s persistent losses and declining revenues over the past eight years. Since reporting its first annual loss in 2018, Huayi Brothers has failed to return to profitability. Cumulative losses since then have nearly erased all profits accumulated since its initial public offering.
The company’s core businesses have deteriorated significantly. Although Huayi Brothers participated as a minor investor in recent box office hits such as “The Wandering Earth 2” and “Hi, Mom,” it has lacked major self-produced projects due to funding constraints. Since the fourth quarter of 2025, the company has not released any new film investments.
Its real-world entertainment division, once touted as a second growth engine, reported zero revenue in the first half of 2025. Ambitious plans to develop multiple large-scale projects have resulted in little more than asset write-downs.
A decade ago, Huayi Brothers was at the forefront of China’s entertainment boom. In 1998, the company invested 30 million yuan in Feng Xiaogang’s “Sorry Baby,” which became a major success. Over the following decade, Huayi-produced films like “A World Without Thieves,” “Assembly,” and “If You Are the One” dominated the holiday box office.
After becoming China’s first privately listed film company in 2009, Huayi Brothers saw its market value soar, and the Wang brothers frequently appeared on rich lists. The company also pursued a strategy of “star capitalization,” acquiring stakes in production companies owned by prominent directors and celebrities.
In 2015, Huayi Brothers spent 1.05 billion yuan to acquire a majority stake in Dongyang Meila, owned by director Feng Xiaogang, and another 756 million yuan for a stake in Dongyang Haohan, founded by celebrities including Li Chen, Angelababy, and Zheng Kai. These transactions generated over 1.7 billion yuan in goodwill.
However, performance targets linked to these acquisitions were not met, leading to significant impairment losses. Meanwhile, early investors such as Huang Xiaoming and Li Bingbing sold their shares at substantial profits, further weakening the company’s financial standing.
The 2018 tax evasion scandal involving the film “Cell Phone 2” is widely seen as a turning point in Huayi Brothers’ decline. Since then, the Wang brothers have resorted to selling personal art collections and pledging company shares to raise funds. As of mid-2025, nearly all of their shares in Huayi Brothers were pledged or frozen.
Both founders have also been subject to court-imposed restrictions on high-consumption activities due to multiple financial disputes. In March this year, Wang Zhongjun was issued a consumption restriction order in relation to a 1.9 million yuan debt case.
Since 2025, Wang Zhonglei and his wife have turned to social media and live-streaming e-commerce, promoting affordable products such as crystal bracelets and health teas—a stark contrast to their former status as entertainment moguls.
According to an earnings forecast, Huayi Brothers’ net assets as of the end of 2025 may fall into negative territory. If audited results confirm this, the company’s shares will face delisting risk warnings under Shenzhen Stock Exchange regulations.
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