Chinese state owned automaker Huachen Automotive Group has been declared bankrupt and has entered a debt restructuring programme, according to local reports.

The company, headquartered in the north eastern Liaoning province, owns four listed companies including Brilliance China Automotive Holdings which has a 50:50 joint venture with BMW Group.

Huachen Automotive, in a statement on 16 November, said its debts exceeded CNY6.5bn (US$990m), causing insurmountable cashflow problems. In October the company defaulted on a CNY1bn (US$152m) bond. 

The Shenyang Municipal Intermediate People’s Court in Liaoning 20 November approved the bankruptcy and restructuring petition by the company’s creditors, after accepting that Huachen Automotive Group had insufficient assets to pay off its debts. The judge suggested it may be worthwhile attempting to rescue the company through restructuring.

Huachen Automotive is one of China’s most high profile fallouts of the year long decline in the Chinese vehicle market which started in June 2019 and was made worse this year by the COVID-19 crisis.