With less than two weeks remaining before the rectification deadline, a critical issue concerning fund misappropriation is reaching its final countdown. On the evening of February 12, ST Xinhua Jin disclosed that the bankruptcy restructuring applications of its controlling shareholder, Shandong Lujin Import and Export Group Co., Ltd., and its indirect controlling shareholder, Xinhua Jin Group Co., Ltd., have been accepted by the Shinan District People's Court in Qingdao. Creditors of Lujin Group are required to submit their claims to the administrator by March 14, 2026, with the first creditors' meeting scheduled for March 20, 2026.
As of now, the repayment progress for the 406 million yuan in misappropriated funds from ST Xinhua Jin remains at zero. Compounding the issue, both the controlling shareholder and the indirect controlling shareholder, who are obligated to repay the funds, have entered bankruptcy restructuring proceedings. Regulatory rules stipulate that if the misappropriated funds are not recovered by February 25, 2026, the company's stock will be suspended from trading. If the rectification is not completed within two months after the suspension, the company faces a delisting risk warning and potential termination of listing.
ST Xinhua Jin received a court decision on February 11 officially appointing the Lujin Group liquidation team as the administrator, with Shandong Deheng Law Firm serving as a member of the liquidation team. The court had previously ruled on January 20, 2026, to accept the bankruptcy restructuring applications of Lujin Group and Xinhua Jin Group. As of the disclosure date of the 2025 semi-annual report, Xinhua Jin Group and its affiliates had non-operational fund balances totaling 406 million yuan. The Qingdao Securities Regulatory Bureau had ordered in August 2025 that all misappropriated funds be repaid within six months of receiving the decision.
However, an announcement released by ST Xinhua Jin after market hours on February 12 admitted that, as of the announcement date, Xinhua Jin Group and its affiliates had repaid zero yuan of the misappropriated funds, and a specific solution for the fund misappropriation had not yet been determined. Behind this "zero repayment" is the complete depletion of liquidity at the controlling shareholder. In its February 12 evening announcement, ST Xinhua Jin straightforwardly highlighted the risks: according to the Enterprise Bankruptcy Law, the non-operational funds misappropriated by Xinhua Jin Group and its affiliates are considered ordinary claims, carrying the risk of low recovery rates and potential failure to obtain full repayment.
If the bankruptcy of the controlling shareholder is a long-term concern, the imminent regulatory deadline is an immediate and potentially fatal worry. According to the Qingdao Securities Regulatory Bureau's rectification order, ST Xinhua Jin must recover the 406 million yuan in misappropriated funds by February 25, 2026. Currently, less than two weeks remain before this critical deadline. Relevant regulations state that if the company fails to complete the recovery within the six-month rectification period, its stock will be suspended. If the rectification is not completed within two months after suspension, the stock will face a delisting risk warning. Failure to complete the rectification within the subsequent two months will result in the termination of the stock's listing.
An internal asset restructuring between ST Xinhua Jin and Xinhua Jin Group has also encountered problems. According to a progress announcement on February 12 regarding the acquisition of a 100% equity stake in Shandong Xinhua Jin New Material Technology Co., Ltd., the company had planned in 2023 to acquire assets from Xinhua Jin Group for 161 million yuan. Subsequently, because the relevant parties failed to obtain all necessary qualifications and approvals required for production and operation by December 31, 2025, rendering the conditions for commencement unmet, according to the equity transfer agreement, Xinhua Jin Group is required to repurchase 100% of the equity in the target company. However, with the court now having accepted Xinhua Jin Group's bankruptcy restructuring application, there is significant uncertainty regarding whether Xinhua Jin Group can fulfill the repurchase payment as stipulated in the agreement.
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