China Ocean Industry has announced that a local court in Jiangsu has declared the bankruptcy of its subsidiary, Nantong Huakai Heavy Industry.
The ruling has frustrated China Ocean Industry’s plan to sell its stake in Huakai. In June, China Ocean Industry entered into an agreement with Nantong Huachuan Transport Equipment to sell 60% interest in Huakai for RMB20m ($2.89m).
The company said the agreement will lapse due to the bankruptcy ruling and it will not proceed any further with the disposal.
The asset value of Huakai Heavy has shrunk substantially in the past three years since China Ocean Industry took over in November 2016 for a price of RMB270m ($39.3m).
In September, the High Court of Hong Kong granted China Ocean Industy’s application to commence a capital reorganisation after Titan Petrochemicals filed a petition with the court in August to wind up China Ocean Industry due to a debt dispute.