Why did the court decide to open bankruptcy proceedings for Rang Dong plastic?

Rang Dong Holding Joint Stock Company (Rang Dong Plastic - RDP) informed that it has received a decision to open bankruptcy proceedings from the People's Court of Ho Chi Minh City.

The decision stated that the panel of judges in charge of conducting bankruptcy proceedings with RDP includes Ms. Hoang Thi Bich Thao - Head of the panel, Ms. Phung Thi Nhu Mai and Ms. Mai Thi Thanh Tu as two members.

Within 30 days, creditors must send a debt collection notice to the administrator/asset management and liquidation enterprise as designated by the court, including the total debt that Rang Dong Plastic must pay, interest, and compensation according to the contract (if any). Attached to the debt collection notice are documents and evidence proving those debts.

Rang Dong was established in the 60s and was once a symbol of the plastic industry.

At the end of April, RDP shares were forced to be delisted from HoSE and transferred to UpCom. However, the Hanoi Stock Exchange put this stock code on the trading suspension list because the company violated its information disclosure obligations. In mid-July, this stock was suspended.

At the end of January, Rang Dong Holding received a notice from the Ho Chi Minh City People's Court regarding the acceptance of a petition to open bankruptcy proceedings from Rang Dong Films, a subsidiary of this enterprise, on the grounds of insolvency.

The court then asked the company to explain the cause, declare assets, list of creditors and debtors.

Rang Dong Plastic has been repeatedly reminded for not publishing financial reports for the third and fourth quarters of 2024, corporate governance reports, and audited financial reports for 2024.

In a document sent to the Ho Chi Minh City Stock Exchange (HoSE), explaining the delay in submitting information disclosure in early February, Rang Dong Plastic said that since the second half of 2024, the financial situation has encountered many difficulties. This led to the company being "jumped" into the bad debt group in the national credit system, leading to difficulties in the operations of subsidiaries and member companies.

By the time bankruptcy proceedings were requested, the subsidiaries, member companies and parent company had all temporarily ceased operations. Most of the staff had quit, resulting in the inability to provide data to compile and prepare financial and management reports on time as required by regulations.

In addition, the auditing unit also announced the termination of the contract and no longer audited the 2024 financial statements. The new accountant taking over the job had many difficulties in monitoring and synthesizing financial data.

Chairman of the Board of Directors Ho Duc Lam, who has been with Rang Dong Plastic for the longest time, will also resign in 2024.

At the same time, all 5 members of the Board of Directors, including Chairman Ho Duc Lam, who has been with the company for many years (younger brother of Ho Thi Kim Thoa - former Deputy Minister of Industry and Trade who is wanted) resigned. The company's Board of Directors no longer has any members.

Rang Dong Plastic also held its annual general meeting twice but both failed, as the shareholder attendance rate was only around 15% and no leaders appeared.

Rang Dong Plastic was established in 1960, equitized in 2005, listed on the Ho Chi Minh City Stock Exchange in 2009, and was once one of the symbols of the plastic manufacturing industry.

After equitization in 2005, the company expanded a series of factories in Ho Chi Minh City, Khanh Hoa, Hanoi, Nghe An, Long An , specializing in manufacturing plastic products such as plastic panels, soft packaging, medical plastic, plastic films, especially PVC and roofing sheets in Vietnam.

For many years, Rang Dong Plastic has accounted for about 65% of the market share for PVC roofing sheets, 55% of the market share for PVC thin film products, 35% of the PE market share...

In particular, the company has a line of high-end imitation leather products specializing in serving the yacht interior decoration industry exported to the US, with an average output growth rate of 20% per year.

Before 2023 (except 2017), the company continuously made profits. In 2019, when it invested more in real estate and industrial parks, the company even reached its profit peak.

But in the financial report for the first 6 months of 2024, Rang Dong Plastic recorded a 45% decrease in revenue, down to only 753 billion VND. After deducting expenses, the company lost nearly 65 billion VND after tax, bringing the total accumulated loss up to the end of June 2024 to 266 billion VND.

The company is still drowning in debt. The debt payable by mid-2024 is more than 1,700 billion VND, 6 times higher than the owner's equity.

In 2023, Rang Dong Plastics also had to pay more than 178 billion VND in compensation for losing a lawsuit against Sojitz Planet - a former strategic partner of theirs - regarding a share purchase contract. This large compensation affected the business situation, and difficulties began soon after.

Before resigning, according to the company's governance report for the first 6 months of 2024, Mr. Ho Duc Lam was the largest shareholder, with a 15.87% ownership ratio.
Mr. Lam used to own nearly 65% of the shares of this enterprise after the State Capital Investment Corporation (SCIC) divested all 43.36% of its capital at the end of August 2015.
Currently, Mr. Ho Duc Lam also holds controlling shares at Rang Dong Long An Plastic Joint Stock Company, Rang Dong Films Joint Stock Company, Rang Dong Healthcare Joint Stock Company... In which Rang Dong Films Joint Stock Company is the legal entity that submitted documents to the Ho Chi Minh City People's Court, requesting to open bankruptcy proceedings against Rang Dong Plastic on January 2.

Quang Huy

Source: https://vtcnews.vn/vi-sao-toa-quyet-dinh-mo-thu-tuc-pha-san-nhua-rang-dong-ar959903.html