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Developer refuses to file bankruptcy

Update: June, 01/2012 - 09:38

HA NOI — Ha Noi Investment General Corporation (SHN) will not file for voluntary bankruptcy despite being short of cash and burdened with a high bad debt ratio, said CEO Dinh Hong Long at the company's shareholders meeting this week.

SHN has been on the verge of bankruptcy since the beginning of this year, when information leaked that the company would unlikely recover debt due from Beta BQP Joint Stock Co worth a total of VND238 billion (US$11.3 million).

According to Long, any bankruptcy must follow two steps. First, three-quarters of shareholders must agree to the dissolution. Second, the insolvent firm, or any firm facing three consecutive years of losses, must de-list its shares.

"SHN cannot go bankrupt in the next two years unless a group of more than 75 per cent of shareholders calls for bankruptcy," Long told

Following the insolvency of his company and its default on its debts, Beta BQP general director Nguyen Anh Quan was arrested, Long said. SHN would try to overcome the difficulties caused by the default and its operations, he said.

In March 2011, SHN signed a contract with Beta BQP under which it lent VND379 billion ($18 million) towards the Thanh Ha Cienco 5 real estate project in Ha Noi's Ha Dong District. SHN transferred VND238 billion ($11.3 million) to Beta BQP, but the two companies decided to halt the contract in June 2011, and Beta BQP defaulted on the debt, causing SHN to file suit.

By December of last year, SHN's short-term liabilities had reached VND358.9 billion ($17.1 million) while its total assets were just VND355.2 billion ($16.9 million). It reported a loss of VND146 billion for 2011 and over VND17.4 billion ($831,000) in the first quarter of this year. In a document sent to the Ha Noi Stock Exchange on March 30 of this year, SHN admitted it was facing bankruptcy due to the nine-month past-due loan to Beta BQP.

In addition, due to the slowdown in the real estate market, SHN has had to halt some of its own projects this year. Market insiders say that, under its financial situation, SHN's ability of maintain operations largely depends on its ability to recover the debt from Beta BQP. — VNS

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