Zhongrong Trust responds to Huaxia Happiness's debt restructuring: it has hired a team of lawyers and will initiate a lawsuit as soon as possible

21st Century Business Herald reporter Zhu Yingzi Beijing reported that zhongrong trust took further action after refusing to join the debt committee due to dissatisfaction with Huaxia Happiness's debt restructuring plan.

On February 10, the 21st Century Business Herald reporter learned that Zhongrong Trust had hired a team of lawyers on the same day, saying that it would "launch a lawsuit as soon as possible and resolutely protect the rights and interests of the client." ”

Illegal payment of pledged receivables?

"The company found that the accounts receivable of 17.649 billion yuan pledged by Huaxia Happiness had been paid in violation of the law, which had seriously damaged the interests of investors." Zhongrong Trust said that through the tracking and analysis of the financial statements of Huaxia Happiness and the pledgee, it was found that the amount of accounts receivable in Hebei Province decreased but the corresponding funds were not received in the regulatory account, and there was a similar situation in the accounts receivable of a certain city in the south.

For accounts receivable funds that have not been collected to the designated account. Zhongrong Trust said that after discovering the situation, Zhongrong Trust repeatedly sent letters to local governments and Huaxia Happiness for verification, and as of February 9, 2022, it had not received any reply.

It is understood that the total principal amount of the four collective trust plans managed by Zhongrong Trust is 5.984 billion yuan. The total pledge of Huaxia Happiness's accounts receivable to the local governments of each park due to the construction of the park is 17.649 billion yuan, and the overall pledge rate is less than 35%.

In addition, Zhongrong Trust revealed that before the financing was issued, Huaxia Happiness issued a notice letter to the local government of each park, informing the park government that it would pledge the accounts receivable generated by the park government due to the ppp project to Zhongrong Trust Financing, and the park government also issued a commitment letter to Zhongrong Trust, knowing that the investors represented by Zhongrong Trust had the right of first refusal to reimburse the receivable after the pledge, and promised that "the subsequent receivables will be paid to the designated regulatory account." The payment collection account will not be changed without the consent of Zhongrong Trust.".

For the situation reflected by the above-mentioned Zhongrong Trust, on February 10, the reporter repeatedly called the Huaxia Happiness Letter Approval Telephone during working hours, but could not be connected.

Why are you dissatisfied with the debt restructuring plan?

It is understood that in October 2021, Huaxia Happiness provided Zhongrong Trust with a repayment plan of "5 years of trust loan clearance, low interest and interest calculation", but after Zhongrong Trust held a beneficiary meeting to coordinate investors to agree to the plan, Huaxia Happiness extended the repayment period to 8 years.

As a result, on February 6, 2022, Zhongrong Trust issued an interim management report, saying that because the debt restructuring conditions provided by Huaxia Happiness violated the principles of the Debt Restructuring Plan and debt resolution work, and there were still greater risks in the debt restructuring conditions. In order to protect the interests of the settlor, as the trustee, Zhongrong Trust is temporarily unable to join the Huaxia Happiness Debt Committee on behalf of the trust plan, or accept the current debt restructuring plan of Huaxia Happiness and sign the Debt Restructuring Agreement on behalf of the trust plan.

"If there is no subsequent change in the breach of the commitment of the accounts receivable, Zhongrong Trust, as the trustee, will also take resolute action on behalf of the trust plan." Zhongrong Trust mentioned in the above-mentioned interim report.

On February 8, in response to the fact that Zhongrong Trust temporarily did not accept the debt restructuring plan, Huaxia Happiness responded that at present, the company has conducted several rounds of consultations with Zhongrong Trust and is making further detailed communication on the specific content of the agreement; the debt restructuring work is steadily advancing, and the company will continue to adhere to the basic principle of "not evading and abolishing debts", strictly implement the Debt Restructuring Plan, promote the signing of debt restructuring agreements, effectively protect the legitimate rights and interests of creditors, and strive to resolve the debt risks of Huaxia Happiness as soon as possible.

On February 9, Huaxia Happiness disclosed the progress of debt restructuring, as of now, the amount of financial debt in its Debt Restructuring Plan has been signed to achieve debt restructuring, with a total amount of 42.918 billion yuan, and the corresponding debt interest reduction and exemption of penalty interest totals 2.869 billion yuan.

According to Huaxia Happiness's disclosure on October 8, 2021, its existing financial debt totaled 219.2 billion yuan. As of January 20, 2022, Huaxia Happiness's accumulated debt that has not been repaid on time totals 93.556 billion yuan (excluding interest), and the repayment of all financial debts will be implemented under the unified arrangement of the Debt Restructuring Plan.

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