Why did Ricons file a petition to open bankruptcy proceedings with Coteccons?

Ricons stated that numerous false pieces of information related to Ricons' filing for bankruptcy proceedings against Coteccons have been posted on social media, affecting Ricons' reputation and business operations and increasing unnecessary tension between the parties.

According to Ricons, the filing of a request for bankruptcy proceedings against Coteccons is a result of overdue debts "acknowledged by Coteccons" but which have remained unpaid for many years.

" Ricons considered the optimal solution to recover the outstanding debt and proactively sent numerous letters to Coteccons proposing a solution. During this process, we also informed and updated Coteccons about Ricons' filing for bankruptcy proceedings, hoping to resolve the issue before the court accepts the application, in order to avoid potential adverse consequences. Unfortunately, we did not receive a positive response from Coteccons ," a Ricons representative shared.

According to the company, Ricons' request for payment of outstanding debts and its filing for bankruptcy proceedings followed legal procedures over a long period. On July 4, 2023, the court accepted Ricons' application. The company explained that "the aforementioned legal action was solely aimed at recovering the long-overdue debt."

Coteccons' debt is recorded in Ricons' financial statements.

According to Ricons' Q2/2023 financial report, Coteccons owes it over 322 billion VND. In addition, Gamuda Land JSC owes over 647 billion VND, and other customers owe 2,401 billion VND.

In the second quarter of 2023, Ricons' net revenue reached over VND 2,102 billion, a decrease of 24% compared to the same period last year; after-tax profit was over VND 52 billion, an increase of 90% compared to the same period.

For the first six months of the year, Ricons achieved net revenue of VND 3,821 billion, a decrease of 20%. The company reported a net profit of over VND 68 billion, an increase of 41% compared to the same period last year.

Meanwhile, according to the consolidated financial report for the second quarter of 2023, Coteccons recorded net revenue of nearly VND 3,619 billion, a 10% increase compared to the same period last year. The main revenue came from construction contracts, accounting for the majority at nearly VND 3,613 billion, with the remainder coming from construction equipment rental (nearly VND 4 billion) and office rental (over VND 3 billion).

Coteccons' liabilities totaled over VND 13,103 billion, a 22% increase compared to the beginning of the year. This includes over VND 697 billion in short-term loans and financial lease liabilities, and nearly VND 498 billion in long-term financial loans. Notably, Coteccons did not mention its debt to Ricons Construction Investment Joint Stock Company (Ricons) in this reporting period.

Coteccons announces that it has received Notice No. 10/TB-TA dated July 4, 2023, from the People's Court of Ho Chi Minh City regarding the acceptance of the application for bankruptcy proceedings. The plaintiff is Ricons Construction Investment Joint Stock Company.

Coteccons confirms that transactions involving accounts receivable and accounts payable (referred to as liabilities) have occurred between the two companies.

Debts arising from the period before 2019, Coteccons and Ricons are managed and defined as contributing components to an ecosystem of 7 interconnected member companies, including: Coteccons, Unicons, Ricons, Newtecons, BM Windows, Sol E&C, and Boho.

During its operation within the ecosystem, Ricons, as the general contractor for several projects, has had transactions involving Coteccons as a subcontractor, such as the Regina Hung Yen Project, the Dong A Project Design, the Golden Palace Project, and some equipment leasing transactions between the two companies. These outstanding debts remain unresolved due to difficulties in determining the value of the debt and obtaining legally valid supporting documents.

Similarly, some projects where Coteccons acted as the main contractor but incurred debts to Ricons as a subcontractor have not yet been settled, such as: Newtatco Project, Regina Phase 4 Project, Regina Miracle Factory, Regina Phase 6, Regina Hung Yen Project, Vinfast Factory Project, and Simco Project.

“ The above are the reasons leading to the dispute over the economic contract between the two companies. Coteccons has repeatedly requested direct meetings and written documents, but Ricons has failed to provide legal documents according to the requested debt value ,” the announcement on Coteccons’ website stated.

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