HA NOI — Ha Noi Investment General Corporation (Hanic) faces the threat of bankruptcy due to a bad debt of VND300 billion (US$14.35 billion) from an investment in the real estate project of the BETA BQP Joint Stock Company.
Hanic Chairman and CEO Dinh Hong Long told Cafef.vn - an online business website- that his company stood on the verge of bankruptcy because of its bad debt leading to a lack of investment in existing production and business. Therefore, its workers were forced to stop working and it had a loss of VND70 billion ($3.35 million) last year.
Long said there were five factors that push enterprises to the bankruptcy; the loss of ownership capital, productivity, salary, insurance and business activities. Of these, the loss of ownership capital is the most important thing and SHN had a loss of ownership capital of VND300 billion.
Additionally, the company had a loss of VND70 billion last year in production and business and if this trend continued, it was expected to lose VND70-80 billion total this year, Long said.
In March 2011, Hanic signed a co-operation contract with BETA to fund VND300 billion to the Thanh Ha Cience 5 real estate project located in Ha Dong District, Ha Noi and BETA committed Hanic to be the exclusive distributor of the Thanh Ha Cienco 5 project.
BETA is a joint venture operating in investment and construction sectors.
But in June 2011, BETA stopped the co-operation with Hanic as the two sides could not reach a contract where Hanic would be the exclusive distributor.
BETA committed to refund the investment of VND300 billion to Hanic, interest rate of the investment and pecuniary penalty of VND35 billion for violating its commitments but so far, BETA had not paid the bad debt, Long said. BETA general director Nguyen Anh Quan, who signed the contract, has left Viet Nam, leaving the debt, according to police.
This has poor implications for Hanic's reputation and would have a bad impact on the price of Hanic's shares with the code of SHN on the stock market coming time. The bad situation has put more than 6,000 shareholders at risk of losing capital, hundreds of employees at risk of losing their jobs, and leaving more than 2,000 employees working in foreign countries without oversight.
On March 13, Hanic decided to sue BETA to collect the debt and has chosen SMIC as its consulting law firm, Long said. The company expected the state offices would help it recover the debt and overcome the existing hardships. — VNS