Huayi Brothers Media Corporation (300027.SZ), once a dominant force in the entertainment industry, is now facing a petition for restructuring. On the evening of April 15, the company announced it had received a notice from its creditor, Beijing Tairui Feike Technology Co., Ltd. The creditor has applied to the Jinhua Intermediate People's Court in Zhejiang Province for a restructuring of Huayi Brothers, citing the company's inability to repay due debts and its lack of solvency, while acknowledging it still possesses restructuring value. A pre-restructuring procedure was also requested.
The announcement stated that if the court formally accepts the pre-restructuring application and the company subsequently completes the restructuring process successfully, it would help improve its operational and financial condition, optimize its asset-liability structure, and enhance its sustainable operational capabilities.
Prior to this development, Huayi Brothers had encountered a series of negative signals. Late last year, a judicial auction of a significant block of shares held by actual controller Wang Zhongjun ultimately failed to sell, sparking widespread speculation about instability in the company's control. Subsequently, Hangzhou Ali Venture Capital Co., Ltd. completed a share reduction, lowering the combined shareholding of itself and its concert party, Jack Ma, from 6.064215% to 4.999996%, meaning the "Ali faction" no longer qualifies as a major shareholder holding over 5%.
The question remains whether this petition for pre-restructuring under heavy debt pressure represents an opportunity or a crisis for Huayi Brothers. Jiang Han, a senior researcher at Pangoal Institution, believes the film industry is a typical attention economy. The ability to consistently produce hit content directly determines capital recovery and market confidence. The core reason for Huayi Brothers' decline from its peak is precisely the instability of its content output. The key to restructuring lies in debt and equity reorganization. If strategic investors with industrial synergies can be introduced, bringing capital, channels, and management expertise, it might be possible to break the vicious cycle of "debt and losses."
In the secondary market, Huayi Brothers was once a darling of capital. Its stock price reached a historical high of 32.13 yuan per share in 2015, with its market capitalization surpassing 90 billion yuan. However, those glory days are long gone. Influenced by the restructuring news, Huayi Brothers' stock opened and hit the daily limit-up on April 16, closing at 2.09 yuan per share, a gain of 20.11%. Its total market capitalization now stands at just 5.799 billion yuan, having shrunk by over 93% from its peak.
If the restructuring fails, Huayi Brothers could face bankruptcy and delisting. The basis for this restructuring petition stems from an advertising dispute between the creditor, Tairui Feike, and Huayi Brothers. The announcement disclosed that Huayi Brothers failed to pay a principal debt of 11.405 million yuan that had come due. As early as September 2025, the Chaoyang District People's Court in Beijing had ruled on the case, ordering Huayi Brothers to pay the outstanding amount, but the company failed to comply.
In December 2025, due to the overdue debt, the court issued consumption restriction orders against Huayi Brothers and its actual controller, Wang Zhongjun, prohibiting them from high-consumption activities such as taking flights or high-speed trains and staying in star-rated hotels. After unsuccessful attempts to collect the payment, Tairui Feike formally initiated the judicial restructuring process four months later.
Huayi Brothers stated that it has not yet received the court's documents accepting the pre-restructuring application, and there is significant uncertainty regarding whether it will proceed to pre-restructuring or formal restructuring. Furthermore, if the court rules to accept the restructuring application, the company's stock will be placed under delisting risk warning (*ST) by the Shenzhen Stock Exchange. If the restructuring ultimately fails, the company faces the possibility of being declared bankrupt and having its listing terminated.
In reality, Huayi Brothers is on the brink of delisting. According to its estimates, its net asset value at the end of 2025 was between -94 million yuan and 63 million yuan. If its audited annual report, to be released on April 29, confirms a negative net asset value, its stock will immediately be placed under delisting risk warning (*ST).
The announcement also pointed out that restructuring procedures differ from bankruptcy liquidation. The purpose of restructuring is to rescue the company, preserve its legal entity status, and restore its profitability through judicial processes that readjust its assets and liabilities and rearrange its operations and management, thereby helping it escape financial and operational distress. To date, several listed companies have successfully completed restructuring, achieving positive economic and social outcomes.
It is important to note that Huayi Brothers was once a star company in the capital markets. Founded in 1994 by brothers Wang Zhongjun and Wang Zhonglei, it is a well-known comprehensive entertainment group in mainland China and was a pioneer in listing on the ChiNext board in 2009, earning the title "the first stock of Chinese film and television entertainment."
Financially, Huayi Brothers' glory has faded. From 2018 to 2024, the company accumulated losses exceeding 8.2 billion yuan over seven years. In the first three quarters of 2025, Huayi Brothers reported a net loss attributable to shareholders of 114 million yuan, a decrease of 168.15% year-on-year. Furthermore, according to its 2025 earnings forecast, the company expects an annual net loss attributable to shareholders between 289 million yuan and 407 million yuan, compared to a loss of 285 million yuan the previous year. This indicates that Huayi Brothers may face an eighth consecutive year of losses.
The company's debt pressure is also substantial. In the third quarter of 2025, Huayi Brothers' liabilities reached 2.294 billion yuan, with its asset-liability ratio rising to 87.69%. This included short-term borrowings of 217 million yuan and non-current liabilities due within one year of 311 million yuan, while its cash and cash equivalents balance was only 19 million yuan.
As of April 1, 2026, the company's total overdue debts to banks and other financial institutions amounted to 56.399 million yuan, exceeding 10% of its audited net assets from 2024. Additionally, 34 of its bank accounts have been frozen.
Huayi Brothers explained that due to the economic situation, some expected repayment funds failed to arrive as scheduled, leading to a temporary liquidity crunch. This resulted in the company's inability to repay certain individual debts on time. The company stated it is actively negotiating loan extensions with the relevant financial institutions and will continue with asset disposals.
Earlier, on October 10, 2025, Huayi Brothers had disclosed total overdue debts of 100 million yuan, primarily owed to corporate creditors (approximately 95.7159 million yuan), with smaller amounts overdue to financial institution creditors like Bank of Hangzhou and China Zheshang Bank Co., Ltd. (totaling 4.6826 million yuan).
Huayi Brothers' debt problems are now extending from its financial statements to its judicial credit. Tianyancha records show that on April 8, 2026, a 100 million yuan equity stake in the wholly-owned subsidiary "Huayi Brothers Film (Haikou) Co., Ltd.," held by Huayi Brothers Film Co., Ltd., was frozen by the Dongyang People's Court in Zhejiang Province until April 7, 2029. This company, helmed by Wang Zhonglei, now finds even its equity transfer channels blocked.
In January 2026, Huayi Brothers and its legal representative, Wang Zhongjun, were subject to another consumption restriction order from the Beijing Chaoyang District People's Court, involving enforcement targets of approximately 1.89 million yuan. This marks the third time the company has been listed since 2025.
Yuan Shuai, co-initiator of the New Intelligence Forum on New Quality Productive Forces, stated that unlike ordinary debts, the recent large-scale defaults to financial institutions can quickly trigger severe chain reactions. These include blocked financing channels, potential demands from financial institutions for early loan repayment or additional guarantees, directly exacerbating the cash crunch. This also reflects that Huayi Brothers' debt troubles are still intensifying. If not effectively alleviated, the company will face a more severe survival crisis.
The "family assets" of the actual controllers, brothers Wang Zhongjun and Wang Zhonglei, are also being forcibly liquidated through judicial means. In January 2025, approximately 5.55% of the shares held by Wang Zhongjun were put up for auction but failed to sell in the initial auction. They were eventually split and acquired by six individual investors by year-end. Entering 2026, the equity crisis for the Wang brothers persisted.
Currently, the combined shareholding of the Wang brothers has plummeted from 13.9% at the end of 2024 to just 8.26%, and all their shares are frozen. If upcoming auctions are successful, their holding could drop to 7.86%. While they would nominally remain the largest shareholders, their control would be precarious.
As the actual controllers' shares remain under pressure, former capital supporters have chosen to exit. The reduction by the "Ali faction" drew particular attention. On December 17, 2025, Huayi Brothers announced that shareholder Ali Venture Capital, based on its own business arrangements, reduced its stake via block trades, precisely lowering the combined holding of Ali Venture Capital and its concert party, Jack Ma, from 6.064215% to 4.999996%, just below the 5% regulatory threshold. Huayi Brothers stated this reduction "is conducive to the stability of the company's shareholding structure and will not adversely affect normal operations."
Bai Wenxi, Deputy Chairman of the China Enterprise Capital Alliance, explained that reducing the holding below 5% lowers the disclosure obligations and mitigates potential joint liability associated with being concert parties. It also allows for quieter future disposals without triggering announcement requirements.
Historically, the "Ali faction" and Huayi Brothers had a close relationship. Jack Ma was one of the company's founders and a major pre-IPO shareholder. In 2015, Ali Venture Capital invested 1.533 billion yuan in a private placement. However, after years of losses and a plummeting stock price, Ali Venture Capital and Jack Ma began reducing their stake in the third quarter of 2023, likely facing significant paper losses compared to their entry price.
Huayi Brothers' shareholder roster was once filled with prominent figures, including Yu Feng of Yunfeng Capital, Lu Weiding of the "Wanxiang系," and Jiang Nanchun of Focus Media. However, as Huayi Brothers fell from its peak, these major players have largely exited. While Tencent-related Shenzhen Tencent Computer Systems Company remains the fifth-largest shareholder, its stake has been reduced to 1.01%.
Despite the challenges, Huayi Brothers is not without assets. According to its 2025 interim report, film projects include "The Mermaid 2," directed by Stephen Chow, which is in post-production, and "Catching Spies," directed by Feng Xiaogang and starring Lei Jiayin and Hu Ge, which has finished shooting. Other projects like "Little Soldier Zhang Ga" are in production or preparation. The company has also entered the popular short drama market, establishing the "Huayi Brothers Fire Drama" label in late 2024 and collaborating with partners like China Literature and Dianzhong Technology to release several short dramas.
Notably, one of the producers of the recently popular costume drama "Zhu Yu" is Zhejiang Dongyang Haohan Film & Entertainment Co., Ltd., in which Huayi Brothers holds a 49.25% stake, making it the largest shareholder. Industry estimates suggest "Zhu Yu" could generate comprehensive revenue of 800 million yuan, potentially netting Huayi Brothers a profit of 80 to 150 million yuan.
Jiang Han commented that Huayi Brothers' inventory of projects and IP assets possess a dual nature within a bankruptcy restructuring framework. On one hand, they are "near-finished" assets with locked-in marginal production costs; once released, they can generate cash flow, serving as the most direct tool for "blood generation" during restructuring and holding core realizable value. However, realizing this value is highly dependent on liquidity injection, operational restart, and is subject to market release schedules, promotional investment, and audience preference, making it high-risk. On the other hand, the company's brand and IP library, as reusable intangible assets, possess long-tail effects and cross-media monetization potential, serving as key bargaining chips to attract strategic investors. Yet, their value has been severely impaired by continuous losses and damage to the brand's reputation, requiring successful restructuring and hit content to gradually repair.
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