Jiu Rong Holdings Limited Faces New Litigation, Overdue Borrowing, and Heightened Liquidity Risks

Date: 20 April 2026

Key Points from the Announcement

• New Litigation Initiated: Jiu Rong Holdings Limited (“the Company”) has received a court summons notifying its subsidiary, Hangzhou Lu Yun Property Limited (“Lu Yun”), of new legal action filed by Bank of Communications Co., Ltd. Hangzhou Gongshu Sub-branch, relating to an overdue borrowing.
• Significant Overdue Loan: The disputed borrowing involves a principal of RMB49,000,000, with RMB3,500,000 already overdue as of 28 December 2025.
• Legal Demands: The bank (Plaintiff) is seeking immediate repayment of the entire outstanding loan, accrued interest, penalty interest at the 5-year LPR plus 0.6% and a 50% premium, and priority compensation rights over 31 mortgaged properties owned by Lu Yun.
• Hearing Scheduled: The Hangzhou Shangcheng District People’s Court has scheduled the hearing for 13 May 2026.
• Potential Cross-Defaults and Liquidity Risk: The Company warns that failure to resolve this litigation could trigger cross-defaults with other lenders and worsen its already constrained liquidity, as some bank deposits (about RMB12.72 million) have been frozen due to other litigations.
• Ongoing Operations: Despite these challenges, the Group’s main business segments are still operating normally. The Company is seeking legal advice and negotiating with the Plaintiff for a possible settlement.

Details of the Litigation

On 20 April 2026, Jiu Rong Holdings received a formal court summons and response notification from the Hangzhou Shangcheng District People’s Court. The litigation arises from a financial loan contract dispute under Case Number (2026) Zhe 0102 Min Chu No. 6794, filed by Bank of Communications Co., Ltd. Hangzhou Gongshu Sub-branch against its subsidiary, Lu Yun.

The Plaintiff has made several claims:

• Repayment of the full loan principal (RMB49,000,000) and accrued interest as of 28 December 2025 (RMB216,542, broken down into RMB216,303 period interest and RMB239 compound interest).
• Immediate maturity of the remaining RMB45,500,000 borrowing, demanding penalty and compound interest at the 5-year LPR plus 0.6% and a 50% premium, accruing until full settlement.
• Priority compensation rights over the proceeds from the disposal (discount, auction, or sale) of 31 mortgaged real estate properties in Liuhe Jinzuo, Xihu District, Hangzhou, registered under 31 Real Estate Registration Certificates and owned by Lu Yun.
• All litigation costs and related expenses to be borne by the Defendant (Lu Yun).

The hearing is set for 13 May 2026, 14:30, at the Fund Town People’s Tribunal.

Impact on Jiu Rong Holdings’ Financial Position and Operations

The Company acknowledges that due to the default on certain debts, it may face liquidated damages, late payment fees, and penalty interest, raising its overall finance costs. The Group’s financing capability and cash flow are under pressure, and the risk of cross-defaults among its lenders could intensify if the situation is not swiftly resolved. Currently, the Group has bank deposits of approximately RMB12,721,423 frozen due to other property preservation measures, further restricting working capital.

While no cross-defaults have been triggered yet, the Group highlights the risk that such events could disrupt its financial position and daily operations. Importantly, the Plaintiff’s claim for priority compensation over the sale proceeds of the mortgaged properties could mitigate some direct cash outflows, but the outcome remains uncertain.

Despite these litigation and liquidity concerns, the Company reports that its major business segments remain in normal operation. Management is actively seeking PRC legal advice, exploring settlement options, and will make further disclosures as required by law.

Key Considerations for Shareholders and Investors

• Material Litigation and Overdue Borrowing: The scale of the overdue loan and the legal proceedings pose significant risks to the Company’s liquidity, asset base, and future financing capability.
• Asset Risk: 31 real estate properties are at risk of being sold or auctioned to satisfy creditor claims, which could impact the Group’s asset portfolio and future earnings.
• Liquidity and Cross-Default Risk: The situation could worsen if cross-default clauses are triggered, leading to further actions by other banks and creditors.
• Share Price Volatility: Given the nature and size of this litigation, the Company’s share price may experience notable volatility as investors react to potential losses, asset sales, and uncertainty regarding future operations.
• Ongoing Disclosure: The Company commits to keeping the market informed of material developments, as required under Hong Kong listing regulations.

Management Response

The Company is actively seeking legal and financial advice, negotiating with the Plaintiff, and is committed to fulfilling its information disclosure obligations. Management is focused on mitigating adverse impacts and preserving the Group’s operational stability.

Investor Advisory

Shareholders and potential investors are advised to exercise caution when dealing in the shares of Jiu Rong Holdings Limited, given the material uncertainties and risks outlined above.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consider their own circumstances and consult with professional advisors before making any investment decisions. The information is based on the latest public disclosures by Jiu Rong Holdings Limited as of 20 April 2026.

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