Gionee enters the final countdown: official website is inaccessible, bankruptcy liquidation or reorganization?

The opportunities left for Gionee are getting fewer and fewer. On April 9, some netizens discovered that the official website of Gionee mobile phones could no longer be opened.

Final countdown: Bankruptcy liquidation or reorganization if the official website is inaccessible? " title="Gionee enters the final countdown: Bankruptcy liquidation or reorganization if the official website is inaccessible? " width="auto" height="auto" border="0">

A week earlier, the first creditors' meeting of Gionee's bankruptcy liquidation case was held at the Shenzhen Intermediate People's Court, and it was announced that as of March 21, 2019, 558 creditors had been notified to declare their claims, and a total of 372 creditors had submitted their claims. After review, the total amount of bonds was determined to be RMB 17.359 billion.

Since the end of 2017, when Gionee was exposed to a broken capital chain due to overdue payments to suppliers, there have been rumors of restructuring and financing, but none of them came to fruition. In December 2018, the Shenzhen Intermediate Court announced that it had accepted Gionee's bankruptcy liquidation application. This mobile phone brand, which once ranked among the top five mobile phone brands, has entered the later stages.

Funding crisis

Gionee’s crisis broke out suddenly in 2017.

In 2016, Gionee's shipments increased by 21% against the trend, totaling 40 million units, ranking fifth after "Huami, OV". In the first quarter of 2017, Gionee's shipment ranking remained high, and it was regarded as one of the "beneficiaries" of the rise of domestic mobile phones.

However, at the end of 2017, Gionee's senior management team was reported to have gambled in Saipan and owed billions of dollars in debt, which led to a capital chain crisis for Gionee. Although Gionee denied the news at the time, in November of the following year, Liu Lirong, chairman of Gionee Group, admitted in an interview that he had participated in gambling, saying that he had "borrowed" funds from Gionee and lost "billions of dollars" in gambling.

Affected by the gambling news, the share price of Gionee's camera module supplier, Oufei Technology, plummeted on December 14, 2017, and its market value shrank by 4.3 billion yuan in one day. Shortly afterwards, Oufei Technology revealed in an investor conference call that Gionee's accounts receivable were about 600 million yuan and it had applied for property preservation.

In the following month, Shenzhen Tianma A and other companies successively applied for asset preservation. CITIC Bank Dongguan Branch also filed a lawsuit with the court, applying to freeze the assets of Gionee and Liu Lirong's personal assets. On January 9, Liu Lirong's 41.4% stake in Gionee Communications was announced to be frozen, and the restriction period will be until January 9, 2020.

At this point, Gionee’s debt crisis broke out in full swing.

Liu Lirong said in a later interview that the broken capital chain was the direct cause of Gionee's collapse, but the more fundamental reason was that the company had been losing money for a long time. "In 2016 and 2017, Gionee invested more than 6 billion yuan in marketing expenses, and more than 3 billion yuan in foreign investment in the past three years. The two expenses were close to 10 billion yuan, which had a great impact on Gionee's capital chain."

Bankruptcy liquidation or reorganization?

After the capital chain crisis, Gionee tried to raise funds and restructure.

In early 2018, it was reported that Gionee had received financing and would change its operation mode to ODM, retaining the brand but no longer producing mobile phones. Liu Lirong said that Gionee would solve the capital chain problem in three steps to achieve company restructuring, including introducing partners, introducing strategic investors, and selling assets to repay debts. At that time, the investor was rumored to be the electrical giant Hisense, and Hisense's internal staff also leaked relevant information.

But as time went on, no more financing news came out. In November 2018, Gionee held a creditors' meeting to communicate with some suppliers whose debts were more than 80 million yuan. At this meeting, most suppliers agreed to Gionee's bankruptcy reorganization plan.

In December last year, the Shenzhen Intermediate People's Court accepted the bankruptcy case of Gionee Communications, and it was subsequently reported that Gionee was declared bankrupt, but this news was denied by Gionee, who said that the company had not entered the bankruptcy liquidation phase and was still trying bankruptcy reorganization. A Gionee supplier once said that if it entered the bankruptcy liquidation phase, the proportion of recovered payment would be extremely low, so he supported Gionee's bankruptcy reorganization.

On April 2, Gionee's first general creditors' meeting was held. In the subsequent voting process, Gionee's property management plan and property valuation plan were approved, which means that the company's administrators will continue to promote Gionee's bankruptcy and reorganization process, including promoting the merger and bankruptcy of affiliated companies, bankruptcy liquidation and reorganization, and managing and disposing of the company's assets to repay creditors' debts.

After the debt crisis, Liu Lirong once told the media, "Repaying the debt in full in three to five years is what Gionee can do, and it is also my biggest wish now."