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As an independent car company founded in the early 1990s, brilliance Group plays an important role in China's automobile industry. As an established automobile company, brilliance Group has been filed for bankruptcy reorganization by creditors after a huge debt, which has aroused widespread concern in the industry.

Recently, the Shanghai Stock Exchange (hereinafter referred to as "Shanghai Stock Exchange") issued a "Disciplinary decision" for many actions of brilliance Group. Yan Bingzhe, chairman and legal representative of brilliance Automobile Group Holdings Co., Ltd. (hereinafter referred to as "brilliance Group"), and Gao Gang, then chief accountant and head of information disclosure affairs, were publicly condemned.

The SSE said the decision was made after identifying major violations by brilliance and was necessary to tighten market discipline. Although the violation of brilliance Group is an individual case, it has high market attention and great negative impact, which to a certain extent dampens the confidence of investors and the market, affects the healthy and orderly development of the bond market, and should be dealt with seriously in accordance with the rules and regulations.

According to the Shanghai Stock Exchange, brilliance Group mainly violated the following four aspects: 1. Failure to disclose in time the failure to pay off maturing debts, major litigation and judicial freezing of assets, transfer of equity of important subsidiaries, and other major issues affecting debt paying ability and bond price. 2. Under the circumstances of major changes in the solvency of brilliance Group and significant uncertainty in the repayment of principal and interest on bonds, it fails to abide by the promise in the prospectus and carry out asset transfer and pledge without the consent of the trustee. 3. Failing to cooperate with the trustee to carry out risk investigation and credit risk management in accordance with the regulations, and repeatedly rejecting the request for on-site interview by the trustee at the critical time of bond redemption, refusing to provide proof of funds; 4. In the case of major changes in solvency, the risk resolution and disposal plan has not been formulated in accordance with the regulations, and the relevant payment risks and disposal progress have not been prompted in a timely manner.

According to official data, brilliance Automobile Group holding Co., Ltd. is a key state-owned enterprise under the Liaoning Provincial State-owned assets Supervision and Administration Commission, with its headquarters located in Shenyang, Liaoning Province. The Group has three independent brands of "China", "Golden Cup" and "Huasong" and two joint venture brands of "brilliance BMW" and "brilliance Renault". The products cover the field of passenger vehicles and commercial vehicles.

Brilliance BMW, in particular, has contributed as much as 27 billion yuan in profits to brilliance in recent years. Data show that brilliance BMW has contributed 3.923 billion yuan, 3.993 billion yuan, 5.233 billion yuan, 6.245 billion yuan and 7.626 billion yuan to brilliance Automobile Group in the past five years, with a cumulative profit of 26.9 billion yuan.

In this context, brilliance Group should have developed better, but contrary to one's wishes, brilliance Group over-relied on the profit support of brilliance BMW, which led to the derailment of its own brand and mainstream independent brand. Brilliance China, Golden Cup brand, Hua Song brand gradually faded out of the market.

Brilliance's serious decline in independent business has led to continued losses, and the emergence of debt problems has also aggravated the corporate crisis. Brilliance China's semi-annual report shows that brilliance's revenue in the first half of 2020 was 1.45 billion yuan, with a net profit of 4.025 billion yuan. However, excluding the 4.383 billion yuan net profit contributed by brilliance BMW, this means that brilliance China itself lost more than 340 million yuan.

On November 20, 2020, the Shenyang Intermediate people's Court ruled to accept the creditor's application for the reorganization of brilliance Automobile Group holding Co., Ltd., which means that the independent car company has officially entered the bankruptcy reorganization process. At the same time, the CSRC adopted administrative supervision measures to issue warning letters to brilliance Group and decided to file an investigation into its suspected information disclosure in violation of laws and regulations, and to conduct simultaneous verification of the intermediary agencies involved in the bonds of brilliance Group, and seriously investigate and deal with relevant violations of laws and regulations.

Cui Dongshu, secretary-general of the Federation of passengers, believes that brilliance Group originally has a good foundation, whether it is BMW or Golden Cup, are in the leading position. However, brilliance Group did not continue to strengthen independent technology research and development to ensure the continuous improvement of product power, but passively responded to laws and regulations and fierce competition, and finally had today's dilemma, and its failure experience should be used for reference by all automobile companies.

It is worth mentioning that in the bankruptcy restructuring of brilliance Group, brilliance BMW has made a leap. Brilliance BMW sold 602247 vehicles in 2020, up 11.8 per cent from the same period last year, according to the Federation of passengers.

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