After being sentenced by the U.S. court to pay hundreds of millions of yuan, the case was remanded for retrial!
Reporter: Liu Songhui Editor: Cheng Peng, Wei Wenyi
Due to a foreign-related equity dispute case, Dream Lily (SH603313, stock price 10.45 yuan, market value 5.963 billion yuan), a leading software home furnishing company, was ordered to pay US$24.7056 million to overseas distributors, and this fee has since been adjusted to US$17.2741 million (about 123 million yuan).
ON NOVEMBER 24, MONTLILY ISSUED AN ANNOUNCEMENT ON THE PROGRESS OF THE LITIGATION INVOLVED, SHOWING THAT MONTLILY, HEALTHCARE GROUP (HONG KONG) CO., LTD (HEREINAFTER REFERRED TO AS HENGKANG HONG KONG), NI ZHANGGEN, THE ACTUAL CONTROLLER OF THE COMPANY, AND BENJAMIN FOLKINS (MINORITY SHAREHOLDERS OF THE COMPANY'S U.S. SUBSIDIARY CHINA BEDS DIRECT, LLC, HEREINAFTER REFERRED TO AS BJ), UPWARD MOBILITY, INC. (a company controlled by BJ, hereinafter referred to as UM Corporation) filed an appeal with the Tennessee Court of Appeals in the United States, and the Court of Appeal announced its preliminary conclusion in November: the jury's verdict and the trial court's verdict were reversed, and the case was remanded for a new trial.
It is worth noting that in the first three quarters of this year, Dream Lily achieved a net profit of 113 million yuan (about 15.79 million US dollars) attributable to the parent company. In the above-mentioned foreign-related equity dispute case, although the amount that Dream Lily needs to pay to overseas dealers has been reduced from US$24.7056 million to US$17.2741 million, it is still higher than the net profit attributable to the parent company of Dream Lily in the first three quarters of this year. It can be seen that the verdict of this lawsuit is very important for the operation of Dream Lily.
The day before the announcement (November 23), Ni Zhanggen, chairman of Dream Lily, shouted on social media platforms: "Justice will be late, but it will not be absent." He also said that this is a lawsuit that can be fought with his life, and the dignity of individuals and companies is at stake.
The case was remanded for retrial
The chairman called "take your life to fight"
As an enterprise with export revenue accounting for more than 80%, Dream Lily was established in 2003 in Nantong, Jiangsu, formerly known as Hengkang Home Furnishing, its main products include memory foam mattresses, pillows and other household products, and is the first batch of companies engaged in the research and development, design, production and sales of memory foam home furnishing products in China.
From the perspective of business scale, in the first three quarters of this year, Dream Lily achieved an operating income of 5.715 billion yuan, second only to Gujia Home Furnishing and Xilinmen, ranking third in the domestic soft home furnishing industry.
Around 2011, Dream Lily sought to develop globally and established joint ventures with local home furnishing companies in Europe and North America, with Dream Lily as a controlling shareholder.
The above-mentioned lawsuit revolves around the American Dream Lily Company, whose main business is the retail and wholesale of Mlily brand memory foam household products in North America, which is 55% owned by Hengkang Hong Kong and BJ, the distributor of Dream Lily in the United States, and 45% respectively.
At the end of 2016, BJ offered to withdraw from American Dream Lily and demanded that it be paid more than US$3 million in consideration for its 35% stake in American Dream Lily under the Operating Agreement. However, Dream Lily refused to pay, and in April 2017, BJ filed a lawsuit in the Court of Chancery of Hamilton County, Tennessee, USA, and Dream Lily, Hengkang Hong Kong, and Ni Zhanggen went to the dock.
According to Dream Lily, on September 3, 2021, the lawsuit obtained a first-instance judgment, involving an amount of 25.9387 million US dollars (including 4.0689 million US dollars for the equity withdrawal of BJ and 20 million US dollars in punitive damages, etc.). In addition, BJ had to pay $1,233,100 to Dream Lily. On February 11, 2022, Dream Lily announced that the above-mentioned lawsuit case was issued by the Chancery Court of Hamilton County, Tennessee, USA, and the adjusted judgment involved in the judgment involved was $18.5072 million (including $4.0689 million in equity withdrawal and $11.5161 million in punitive damages to be paid by Dream Lily). In addition, BJ had to pay $1,233,100 to Dream Lily. ）
According to the adjusted judgment, the punitive damages to be paid by Ni Zhanggen and Menglihe to BJ were reduced from $20 million in the first-instance judgment to $11,516,100, and it was clarified that BJ was entitled to compensation of $977,600 for attorney fees and $74,700 for litigation costs. To sum up, the total amount of expenses to be paid by Dream Lily was adjusted from US$24.7056 million in the first-instance judgment to US$17.2741 million, a decrease of US$7.4315 million.
On November 24, Dream Lily disclosed the latest progress of the lawsuit, after the company appealed to the Tennessee Court of Appeals in the United States, in November this year, the Court of Appeal announced the preliminary conclusion: the jury's verdict and the trial court's verdict were vacated, and the case was remanded for a new trial.
Dream Lily said that at present, the appeal court has not officially issued the appeal result, the preliminary conclusion has not yet officially taken effect, and the formal judgment will be made after the expiration of the 30-day public announcement period. As of September 30 this year, the company confirmed the estimated liability of 124 million yuan according to the adjusted judgment. The outcome of this lawsuit is uncertain, and the impact on the company's profit in the reporting period cannot be determined for the time being.
The day before the announcement was issued, Ni Zhanggen, chairman of Dream Lily, shouted on social media platforms: "Justice will be late, but it will not be absent." He also said that this is a lawsuit that can be fought with his life, and the dignity of individuals and companies is at stake.
Ni Zhanggen also shared a screenshot of the chat, which read: "Dream Lily's appeal was successful, and the appellate court found that the trial judge's behavior at that time was illogical and an abuse of discretion. The results of the appeal were published on the Tennessee Administration of Justice website, causing an uproar. He also commented, "It's the best Thanksgiving gift (November 23). ”
He has used football to market the world
Revenue in the first three quarters decreased year-on-year
According to public information, Ni Zhanggen was born in Rugao City, under the jurisdiction of Nantong in 1975, graduated from Tongji University, the founder of the MLILY Dream Lily brand, and the chairman of Dream Lily Home.
On the afternoon of November 24, the reporter of "Daily Economic News" came to Dream Lily Shanghai Company located in Puhuitang Road, Xuhui District, and put forward an interview request on the above-mentioned equity dispute case in the United States and the current business situation of Dream Lily.
A staff member at the scene said that the Shanghai company is mainly engaged in offline store business, Ni Zhanggen usually works in the Rugao headquarters, and Zhao Qiongge, the company's deputy general manager, is also on a business trip. Since then, every reporter has called Ni Zhanggen's personal phone number, but he has not been able to get through.
Ni Zhanggen is a football fan and an entrepreneur who loves Go. On the most conspicuous wall in the lobby of Dream Lily Shanghai Company, there is a photo of him with Manchester United players Wayne Rooney and Mata.
In the lobby of Dreamlily Shanghai, a photo of Ni Zhanggen and Manchester United players hangs
Image source: Photo by reporter Liu Songhui
Under Ni Zhanggen's business layout of "Made in the World, Global Marketing, and Football Marketing", Dreamlily landed in the US market in 2012 and the A-share market in 2016 and became the official global partner of Manchester United.
As of June this year, Dream Lily products have sold well in 110 countries and regions, with six production bases in the United States, Serbia, Thailand, Spain and China, with an annual design capacity of more than 10 billion yuan.
It is worth noting that due to the recession in overseas markets, Dream Lily is facing downward pressure on performance. According to the financial report, in the first half of this year, the company achieved a total revenue of 3.601 billion yuan, a decrease of 482 million yuan compared with the same period last year, mainly due to the decline in revenue in the North American market.
In the first half of this year, the domestic market contributed 567 million yuan, a year-on-year increase of 19.57%. However, overall, the revenue of the domestic market accounted for only 15.76% of the company's total revenue.
From 2020 to 2022, Dream Lily achieved operating income of about 6.53 billion yuan, 8.14 billion yuan, and 8.02 billion yuan respectively, and net profit attributable to the parent company of about 379 million yuan, -276 million yuan, and 41 million yuan.
In the first three quarters of this year, the company's revenue was about 5.715 billion yuan, a year-on-year decrease of 5.81%, and the net profit attributable to shareholders of listed companies was about 113 million yuan, an increase of 14.36% year-on-year.
It is worth mentioning that on November 24, Dream Lily announced that it issued 85,287,846 ordinary shares (A) shares by way of issuance to specific objects, at an issue price of RMB 9.38 per share, raising a total of RMB 799,999,995.48, and raising RMB 790,599,995.52 after deducting underwriting and sponsorship fees of RMB 9,399,999.96, which was remitted to the supervision account of the raised funds by GF Securities, the lead underwriter, on November 1.
The funds raised this time will be used for the investment and construction of the three projects of Dream Lily, as well as to supplement the working capital.
Editor|Cheng Peng, Wei Wenyi, Du Hengfeng
Cover picture source: Photo by reporter Liu Songhui
|National Business Daily nbdnews original article|
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