Bestway Marine faces possible bankruptcy as chairman sued over debt default

Financial service provider Guotai Junan Securities has lodged a suit against Bestway Marine chairman Liu Nan with Shanghai Financial Court to pay back the principal financing capital, liquidated damages, interests and litigation costs of the case.

Liu signed a financing agreement with Guotai Junan in March 2017 for RMB160m and RMB75m principal financing capital. As a guarantee Liu pledged his shares in the company to Guotai Junan. Liu was supposed to pay back the funds and release the stock pledge by 21 and 23 March in 2018. However, he failed to execute the financing agreement and had until end 21 December 2018 to repay RMB145.43m in debt. 

Bestway Marine & Energy Technology Co., Ltd., formerly Shanghai Bestway Marine Engineering Design Co., Ltd, established in 2001, was listed in Shenzhen Stock Exchange in 2006. It is engaged in the provision of ship and marine engineering design services, engineering,procurement and construction (EPC) services, as well as the distribution of natural gas. 

The company acquired Shanghai Wojin Natural Gas Utilization Co., Ltd in 2014 to enter into natural gas sector, and acquired Jin Hai Yun Marine Equipment Company to explore military business in 2016. It changed its name to Bestway Marine & Energy Technology Co., Ltd in the same year. 

Bestway posted RMB142m net profit in 201,6 and RMB164m net profit in 2017, hit a record high. However, its performance dropped sharply last year, a loss of RMB1.324bn for the first three quarters of 2018.

Its unstable financial results raised attention of supervision authorities, resulting in fines for the company's board members. The company’s senior management team also began to exit the company in 2018. 

The company’s shareholders tried to sell equity as a fix for its debt problems but failed in the attempt. Currently, Bestway is facing bankruptcy and delisting if no new financial support appears.