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With continuous losses, Lifan shares are mired in a debt crisis. On July 10, Lifan shares announced that 10 wholly-owned subsidiaries were applied to the court for judicial restructuring by creditors because they were unable to pay off their maturing debts, and the company would risk being declared bankrupt due to the failure of the restructuring.

In a notice on creditors applying to the court for judicial restructuring of the company's wholly-owned subsidiaries, Lifan shares revealed that 10 of the company's subsidiaries had been applied for judicial restructuring by creditors because they were unable to pay off their maturing debts. The companies whose creditors have applied to the court for judicial reorganization include Lifan passenger cars, Lifan Automobile sales, Lifan Import and Export Company, Lifan Motorcycle engines, Lifan Automobile engines, Lifan Internal Combustion engine Company, Chongqing Wireless Oasis Communications, Chongqing Shifeng Energy, Lifan Quick Import and Export Trade and Lifan Xi Life Motorcycle sales Co., Ltd.

Lifan shares also said that at the present stage, the production and operation of Lifan passenger cars, Lifan automobile sales, Lifan automobile engines, wireless oasis and peak shifting energy are abnormal.

The announcement said that at present, creditors have submitted restructuring applications to the court, but whether the above applications can be accepted by the court, whether 10 wholly-owned subsidiaries, including Lifan passenger cars, will enter the reorganization process is still a major uncertainty. If the court accepts the creditor's application for the reorganization of the company in accordance with the law, the company's shares will be delisted with a risk warning; if the court formally accepts the application for reorganization of the company, the company will be declared bankrupt due to the failure of the reorganization. If the company is declared bankrupt, the company will be liquidated, and the company's shares will face the risk of being terminated according to the regulations.

Lifan has difficulties in operation and is heavily in debt. Lifan shares issued an announcement on June 17, showing that the company was involved in 392 lawsuits (arbitration) with a total amount of 2.906 billion yuan, of which 221 cases had been awarded and Lifan had to pay 1.836 billion yuan.

Lifan described the current situation of the company in an announcement reminding investors to pay attention to investment risks. Lifan said, at present, the company has sustained losses, high liabilities, a large decline in passenger car business, large debts overdue, large assets frozen, more litigation (arbitration), lack of liquidity of controlling shareholders, unable to return the funds raised, and other operational risks, and the above risks have not yet formed any effective solutions; the company's capital chain is tight and faces serious liquidity risks.

According to the financial report, Lifan shares achieved a total operating income of 7.45 billion yuan in 2019, down 32.35% from the same period last year; the net profit belonging to the shareholders of the parent company was-4.682 billion yuan, down 1950.83% from the same period last year. According to the quarterly results for 2020, Lifan shares achieved operating income of 564 million yuan, down 74.88% from the same period last year; the net profit belonging to shareholders of listed companies was-197 million yuan, down 103.06% from the same period last year.

The company's continuing operational problems and huge debts have made Lifan face a serious crisis.

The latest production and marketing report shows that motorcycles are still the main business of Lifan, and passenger cars are basically abandoned. In the first half of the year, Lifan sold only 1527 passenger cars, while Lifan sold 213536 motorcycles, down 29% from the same period last year.

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