China Fortune Land Development (600340.SH) is embroiled in yet another major controversy! The company's recently disclosed "pre-restructuring" procedures have been publicly criticized by its directors as "uninformed," "unapproved," and "conducted without consultation." In essence, this points to potential backdoor dealings and violations of disclosure regulations in the pre-restructuring process.
China Fortune Land Development bypassed corporate governance protocols to issue a contentious pre-restructuring announcement, forcing uninformed non-independent directors to publicly denounce the move via statements and even file complaints with regulators. As a publicly listed company, such opaque operations in pre-restructuring will undoubtedly erode investor trust and set a negative precedent. Meanwhile, the debt-ridden firm, despite four years of restructuring efforts, remains trapped in a vortex of escalating liabilities, with cumulative overdue debts still at 24.5 billion yuan and nearly 60 billion yuan in losses over the same period, leaving its net assets in negative territory. Now, attempting to corner investors and creditors through backdoor pre-restructuring maneuvers is bound to provoke backlash, dissatisfaction, and conflict.
At a time when financial regulators are enforcing strict oversight to ensure "sharp, teeth-bearing" supervision with zero tolerance, China Fortune Land Development's stock exhibited abnormal volatility ahead of major disclosures, raising suspicions of insider trading and challenging market order.
While governments nationwide are working to build a rule-of-law economy and credit economy per the 15th Five-Year Plan, creating a market-oriented, law-based, and internationalized business environment, Hebei's Langfang—home to China Fortune Land Development—remains mired in the company's debt crisis. What role has Chairman Wang Wenxue and other stakeholders played in these bewildering maneuvers?
Once a high-flying "landlord around Beijing" with annual sales exceeding 100 billion yuan, China Fortune Land Development was deeply intertwined with local industrial development and even served as the largest shareholder of Langfang Bank. Its rise once made Langfang a star example of investment-friendly policies. However, as the tide recedes, the truth is laid bare.
In capital markets, the company has blatantly disregarded corporate governance and investor protection. On November 17, China Fortune Land Development announced that the Langfang Intermediate Court had accepted its pre-restructuring application. Shockingly, the notice revealed that applicant Longcheng Construction Engineering Co., Ltd. filed for pre-restructuring, to which the company "raised no objections." This implies the company was aware of and consented to the process without proper board or shareholder approval—a violation of major decision-making protocols.
Non-independent director Wang Wei, unaware of these actions, publicly condemned the announcement, stating she was neither informed nor consulted, nor were board meetings held, flagrantly violating corporate governance rules. Her statement exposes the company's disregard for transparency and fairness, raising questions about whether Chairman Wang Wenxue and management can uphold the "open, fair, and just" principles required to protect investors.
Such governance failures demand scrutiny from exchanges and regulators. Suspiciously, the company's stock surged with two consecutive limit-up gains on November 13–14, far outpacing the real estate sector's 1.38% rise, followed by two more limit-ups post-announcement. Who profited from advance trades? Potential insider trading must be investigated.
The pre-restructuring debacle has also angered creditors. Longcheng Construction's claim is a mere 4.17 million yuan, while China Fortune Land Development holds 2.4 billion yuan in cash—hardly justifying court-supervised restructuring or bypassing governance for disclosures that triggered abnormal stock movements.
Since 2021, the company's debt crisis has worsened despite government-led restructuring efforts. While 192.67 billion yuan (87.9% of total debt) has been restructured, overdue debts still exceed 24 billion yuan (excluding interest). Meanwhile, cash reserves plummeted from 14.4 billion yuan in 2021 to 2.4 billion yuan today—where did the funds go?
A May 2024 debt-resolution plan further alienated creditors: transferring subsidiaries to Langfang Asset Management for 2 yuan to offset 22.58 billion yuan in debts to Langfang Bank. The deal, involving 2.71 billion yuan in physical assets and 19.86 billion yuan in receivables, effectively prioritized Langfang Bank (now state-controlled) over other creditors, sparking claims of unequal treatment.
While local authorities may justify this as a broader strategy, protecting state-backed banks at outsiders' expense risks damaging Langfang's business environment. As China Fortune Land Development navigates restructuring, adherence to market and legal norms is critical to safeguarding all stakeholders' interests—the company, local government, creditors, and investors alike.
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