Chinese EV Maker Neta's Parent Company Enters Bankruptcy

Zhejiang Hozon New Energy Automobile, the parent company of the electric vehicle (EV) brand Neta, has officially entered bankruptcy proceedings, according to reports from Reuters, citing Chinese state media CCTV.

The move, which took effect on 19th June, signals significant financial difficulties for the Chinese carmaker.

Adding to the woes, several Neta showrooms in Shanghai have reportedly closed their doors. Filings on China's national enterprise bankruptcy disclosure platform show that a creditor initiated bankruptcy proceedings against Hozon as early as last month.

Chinese investment news outlet Bamboo Works indicates that Hozon is undergoing a formal restructuring process aimed at business revitalisation. This reflects the deep-seated issues currently plaguing the Neta Auto brand.

Further details from the national enterprise bankruptcy disclosure platform, dated 13th June, revealed that Shanghai Yuxing Advertising Co. had filed a petition for Hozon to enter bankruptcy, citing unpaid exhibition printing fees. The court has accepted the case and appointed an administrator to oversee the restructuring.

Conflicting reports have emerged from Thailand. Neta's Facebook page in Thailand posted a statement on 12th June, asserting that the restructuring is a government-led recovery effort under court supervision.

The company outlined plans to attract strategic investors, overhaul management, and restart production, research and development, and international expansion.

However, a Thai supplier has cast doubt on this statement, claiming that the local team was laid off by the end of May and that dealers and suppliers have incurred substantial losses.
 

Internally, Neta's struggles have been evident for some time. Reports indicate the company stopped paying employee wages in the latter half of last year, leading to production halts and significant layoffs.

Former CEO Zhang Yong stepped down last December, replaced by Chairman Fang Yunzhou, who promised reforms and improved profit margins.

Yet, the company's operational performance has not recovered. Earlier this month, a group of irate employees reportedly confronted the CEO, demanding their outstanding wages.

Hozon's financial burden is considerable, with debts amounting to nearly 10 billion yuan (approximately $US 1.39 billion). Previous attempts to convert debt into equity and secure new funding have shown minimal progress.