A private steel mill nearly 1.3 billion assets sold 218,000!

An auction of distressed assets went viral. Screenshots show that 35 receivables of Sichuan Southwest Stainless Steel Co., LTD., the largest private stainless steel production enterprise in southwest China, were auctioned off in bankruptcy, with an assessment of 1.295 billion yuan and a final transaction of 218,000 yuan.

On February 21, the reporter saw on the official website of Ali Auction that the auction target was 35 accounts receivable of Sichuan Southwest Stainless Steel Co., LTD., with the net book value of about 1.295 billion yuan after the amount of claims was audited and deducted from the amount already cleared, and the starting price was 130,000 yuan. The auction took place in January this year, a total of four bidders participated in the auction, after 31 rounds of intense bidding, the final sale price of 218,000 yuan.

Public information shows that Southwest Stainless Steel Company was established in 2004, is the largest and only private stainless steel production enterprises in Southwest China. At the beginning of the “Twelfth Five-Year Plan”, it took the lead to become the first ten billion enterprises in Leshan City, and was ranked among the top 500 private enterprises in China. In 2011, Southwest Stainless Steel produced 630,000 tons of stainless steel hot-rolled plate and 340,000 tons of acid-washed white roll, achieving sales revenue of 12.5 billion yuan.

However, in its all-out construction of the second phase of 700,000 tons/year stainless steel annealing and pickling production line project and hot rolling technical transformation project, ready to show a grand plan. Due to the big change in the market environment, the rise of raw materials, the rise of steel and overcapacity and other multiple reasons, for a time, many steel companies went bankrupt. On June 29, 2021, Shawan People’s Court of Leshan City, Sichuan Province ruled to terminate the bankruptcy proceedings of Sichuan Southwest Stainless Steel Co., LTD.

Southwest Stainless Steel was ruled bankrupt

The reporter noted that as early as January 2021, 36 accounts receivable of Southwest stainless Steel began to be put up for auction by the manager, and the first starting price was 10% of the total accounts, that is, 129 million, and no one was interested. By the time of the auction on October 25, 2023, the number of accounts receivable had become 35, the auction price had dropped to 510,000 yuan, and the result was still no auction.

Until this transaction, the non-performing assets have been hung on Ali assets for three years, after 12 auctions, and the starting price has been reduced to 130,000. Although this is a very low transaction price for receivables worth nearly $1.3 billion, actually recovering this amount is not easy.

In this regard, the auction announcement also carried out a risk warning, saying that the auction subject receivables may have managers unable to provide supporting documents other than financial books, external claims may be completely or partially invalid, non-existent, unable to recover, resulting in losses, authenticity defects and other risks. Once the receivables are sold, it indicates that the buyer is aware of the above existing defects and defects that have not been discovered, and the buyer bears the possible risks, which has nothing to do with Southwest Stainless Steel and the manager.