Jiu Rong Holdings Limited Issues Supplemental Announcement: Litigation and Freezing of Bank Accounts

Key Highlights

• Jiu Rong Holdings Limited (“the Company”) and its subsidiaries (“the Group”) are currently involved in five legal proceedings initiated by Hangzhou United Rural Commercial Bank Co., Ltd. (the “Plaintiff”).
• The legal actions have resulted in the freezing of several bank accounts, restricting access to approximately RMB12.72 million of the Group’s working capital.
• The Group faces potential increases in finance costs, reduced financing capability, and heightened cash flow pressure due to the litigation and defaults.
• The Company reported an additional overdue borrowing with Bank of Communications, with RMB3.5 million overdue out of a total of RMB49 million.
• Despite these challenges, the Group’s major business segments remain operational, with some segments affected by liquidity constraints.

Details of the Litigations

The five legal proceedings involve claims totaling approximately RMB282.94 million (principal plus penalties and interest). The cases are all filed with the People’s Court of Xihu District, Hangzhou, and relate predominantly to defaults on loan interest payments and repayments by several Group subsidiaries, including Hangzhou Lu Yun Property Limited, Soyea Jiu Rong Technology Co., Ltd., Zhe Jiang Jiu Rong Intelligent Technology Limited, and Jiu Rong New Energy Science and Technology Limited.

Note: The default in debt repayment has triggered cross-default and acceleration clauses under the relevant loan agreements, making the full loan amounts immediately due.

Other Overdue Borrowings

Beyond the above litigations, Lu Yun also has an overdue borrowing from Bank of Communications, totaling RMB49 million, with RMB3.5 million overdue as of 28 December 2025 and overdue interest of RMB171,500 as of 21 December 2025. As of now, no litigation has been initiated by Bank of Communications, and the Company is actively negotiating repayment or loan extension.

Impact on Financial Position and Operations

• The Company is exposed to additional liquidated damages, late payment fees, and penalty interest, which may further increase finance costs and apply pressure to cash flows.
• There is a risk of cross-defaults with other banks if the current litigations are not resolved promptly; this could significantly impact the Group’s financial position and ongoing operations.
• Despite the freezing of RMB12.72 million in bank accounts, the Group’s main business operations remain ongoing, though some segments are under liquidity stress.

Segmental Update

• Digital Video Business: The Group ceased R&D and production of smart TVs in July 2025 but continues with design, OEM production, and integrated solutions for digital audio-video and related fields. The Group has shifted to a light-asset model, focusing on higher-return operations. There are no current plans to exit this sector.
• New Energy Vehicle Business: Operations remain steady after the sale of 11 charging stations; 80 charging stations are still operated in Hangzhou, indicating continued business strength.
• Property Development/Investment: Real estate sales in Harbin are slow due to market conditions, but rental income from Big Data Industrial Parks and Hangzhou properties is stable and supports cash flow.
• General Trading: This segment is temporarily affected by the frozen accounts, causing the cancellation of some customer orders. However, no default penalties have been triggered.

Actions Taken and Timeline

• The Group is actively negotiating with the Plaintiff and the Court for an early settlement to unfreeze accounts and minimize litigation impact. As of now, formal court hearings have not yet been scheduled, and mediation is ongoing.
• The Board has not made additional provisions for the litigations, as all liabilities are already recognized, legal costs are expected to be minimal, and a settlement is anticipated.
• Management is also in talks with other major creditors about loan extensions and is accelerating asset disposals to reduce debt, while seeking to broaden financing channels.

Key Points for Shareholders and Potential Price-Sensitive Issues

• The Company faces significant litigation risk and frozen working capital, which could affect financing capability, cash flow, and business operations if not resolved.
• The possibility of cross-defaults with other banks remains a material risk if settlements are not reached.
• The Group’s proactive approach to settlement and asset disposal may mitigate risks, but the situation remains fluid and could have material effects on share value.
• Investors should be aware that while the Company is not currently planning to liquidate major segments, ongoing negotiations and asset disposals could impact future business structure or earnings.

Disclaimer

This article is a summary and analysis based on the Company’s official announcement. It is intended for informational purposes only and does not constitute investment advice. Investors are urged to exercise caution when dealing in the shares of Jiu Rong Holdings Limited, as the situation remains fluid and subject to change based on ongoing legal and financial developments.

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