As typical of mainland companies.
Poor management with ulterior motives:
- An official at Fu Ji's headquarters in Shanghai said: "We think the game of financing is too complicated for us. We just want to quit it by liquidation."
- company was short of cash and had lost many middle managers, who had left to set up operations that compete with Fu Ji's businesses.
Bond holders are Fxked as they have no way of recovering a good proportion of assets as the company would have already been stripped. Bonds are trading at a 75% discount which means stock holders will get nothing but an expensive lesson:
Insolvency: who gets what in Hong Kong
- Employees
- Lenders with a claim on the company's assets, such as mortgages on properties
- Unsecured creditors, usually banks and bondholders
- Shareholders
A real clue to the shenanigans happening was the resignation of a Director who actually said something useful:
"Carlye Tsui Wai-ling, chief executive of the Hong Kong Institute of Directors, resigned as an independent director of Fu Ji last month. In her letter of resignation, she expressed concern that she could not get information from the company in a timely manner, and cited its delay in issuing its annual results last year"
This is a similar situation to First Natural Foods (1076) voluntary liquidation.
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