SHANGHAI, April 25 China's debt-stricken
Chongqing Iron and Steel Company warned of
the risk of bankruptcy on Tuesday, after one of its creditors
submitted an application to a local court to reorganise its
Chongqing Steel said in a notice posted to the Hong Kong
Stock Exchange that the creditor, identified as Chongqing
Laiquyuan Trading, told a court on Monday that the southwest
China-based steelmaker's assets were not sufficient to pay off
all its debts.
"If the court formally accepts the application for
reorganisation...(Chongqing Steel) will be exposed to the risk
of declaration of bankruptcy," it said.
The firm, which has blamed its predicament on China's
economic downturn, industrial overcapacity, soaring labour costs
and low steel prices, has tried to expand into more profitable
sectors and ditch its steelmaking assets, which operate at a
But it said last week that there was "great uncertainty"
whether its restructuring plans could proceed, with the firm
struggling to reach an agreement with its main creditors.
Chongqing Steel's audited net profits and assets were
negative for both 2015 and 2016, and if they remain the same
this year, the Shanghai Stock Exchange will suspend trading in
the company's shares, it said.
The firm's former deputy general manager, Dong Ronghua, was
put under investigation by China's graft-busting agency late
last year for unspecified "serious disciplinary violations".
(Reporting by David Stanway; Editing by Randy Fabi)