Litigation exceeds 4 billion yuan, pending performance over 7.7 billion yuan! Former environmental protection giant mired in litigation quagmire, negative net assets may face "*ST" designation, can self-rescue break the deadlock under massive debt pressure?

Everyday Economic News Reporter: Peng Fei Editor: Huang Sheng

Former giant in the environmental sector, Enlighten Environment (SZ000826, stock price 2.38 yuan, market value 3.392 billion yuan), is facing its darkest hour.

On the evening of March 12, Enlighten Environment issued a notice showing that, as of now, the company and its controlling subsidiaries have a total of 4.088 billion yuan in ongoing lawsuits and arbitration cases, accounting for 170.20% of the company’s latest audited net assets. Meanwhile, the amount of previously adjudicated or settled amounts awaiting fulfillment has reached 7.737 billion yuan.

Even more severe, according to the earnings forecast, Enlighten Environment expects a net loss of 2.2 to 2.7 billion yuan after deducting non-recurring gains and losses for 2025. The end-of-year net assets attributable to the parent company may fall below zero, recording a negative value of -2.075 to -2.775 billion yuan. If the final audit confirms negative net assets, the company’s stock will be officially flagged with delisting risk warning (*ST) after the 2025 annual report is disclosed.

The Daily Economic News reporter notes that, faced with multiple “minefields” such as the auction of controlling subsidiary equity, frozen bank deposits, and overdue debts, Enlighten Environment is attempting to resolve liquidity issues through vigorous collection of accounts receivable and asset disposals.

In this battle of restructuring amid mounting litigation and debt pressure, whether Enlighten Environment can successfully turn the tide has become a focus of capital markets.

Deepening Litigation Quagmire: Over 4 Billion Yuan in Unresolved Cases

The litigation storm facing Enlighten Environment is intensifying.

The company’s March 12 announcement titled “Progress of Litigation (Arbitration) Cases” shows that, to date, the company and its controlling subsidiaries have a total of 543 million yuan in unresolved cases related to administrative lawsuits, construction disputes, and other operational matters; and a total of 3.545 billion yuan in unresolved cases as defendants in disputes over construction contracts, creditor-debtor lawsuits, and similar issues.

Combined, the total amount involved in litigation and arbitration cases reaches 4.088 billion yuan, representing 170.20% of the company’s latest audited net assets.

Additionally, the announcement indicates that some previously litigated or settled cases involving the company and related subsidiaries have now reached judgments or settlements, with a total pending enforcement amount of approximately 7.737 billion yuan.

The Daily Economic News reporter observes that these massive legal cases are not just on paper; many have entered the stage of actual enforcement, directly impacting the company’s liquidity.

For example, in a case handled by the Beijing First Intermediate People’s Court, plaintiff Enlighten Technology Service Co., Ltd. vs. defendant Enlighten Environment over a loan contract dispute, the court ordered Enlighten Environment to repay approximately 230 million yuan in principal and interest by December 15, 2025, along with subsequent high interest and court costs.

In a February announcement, the company mentioned that due to the enforcement application by Hunan Jinsha Road and Bridge Construction Co., Ltd., the Intermediate People’s Court of Xianyang, Shaanxi Province, froze and allocated bank deposits of Xingping Hongyuan Development Construction Co., Ltd. and Enlighten Environment totaling 520 million yuan, or may withhold, seize, or auction their income or assets of equivalent value. This involved about 495 million yuan, accounting for 10.54% of the company’s net assets at the end of last year.

Furthermore, the core subsidiary’s equity has been seized and appraised. On February 10, the announcement revealed that the Intermediate People’s Court of Jinan, Shandong Province, froze 6.95 million yuan worth of equity in Hengyang Sande Kaitian Renewable Resources Technology Co., Ltd., held by Enlighten Environment (65% stake), in the enforcement of a construction contract dispute with Zijiang Group. The court also applied for valuation and auction of this equity.

Meanwhile, multiple cases involving Enlighten Environment are being escalated or re-enforced by courts: a loan dispute involving Chang’an Bank Xi’an Yanliang Branch (over 767 million yuan, 16.32% of last year’s net assets) was resumed for enforcement by the Xi’an Intermediate Court; and a construction dispute involving Shaanxi Wanyue Industrial Co., Ltd. was transferred from Yanliang District Court to the Xi’an Intermediate Court for higher-level enforcement.

These frequent lawsuits and enforcement actions highlight the severe external debt collection pressures facing Enlighten Environment.

Projected Losses Up to 3.5 Billion Yuan, Net Assets Turn Negative Trigger Delisting Warning

The heavy legal burdens have directly undermined Enlighten Environment’s financial fundamentals.

According to the company’s January-end forecast for 2025, preliminary calculations suggest a net loss of 2.8 to 3.5 billion yuan attributable to shareholders; after excluding non-recurring gains and losses, the net loss is estimated at 2.2 to 2.7 billion yuan.

This massive loss could cause the company’s year-end net assets attributable to the parent to turn negative, estimated between -2.075 and -2.775 billion yuan. The company issued a risk warning, stating that if the audited net assets attributable to the parent at year-end 2025 are negative, the stock may be subject to delisting risk warning (*ST) after the 2025 annual report is disclosed.

The reasons for such a large projected loss include: judicial auction of some controlling subsidiaries’ equity, resulting in significant investment losses; continued growth of accounts receivable leading to substantial impairment losses; incomplete settlement of transferred assets and underperforming projects causing asset impairments; and overall debt pressure, overdue debts, high financial costs, penalty interest, and breach penalties.

Regarding the current situation, Enlighten Environment’s management is not passive. In the March 12 announcement, the company stated that, given the large overall litigation amount and the fact that some cases are entering enforcement stages, it is actively working to resolve litigation and enforcement risks, communicating with relevant parties, and striving to resolve the cases promptly.

However, with nearly 77 billion yuan in pending enforcement judgments and 4 billion yuan in unresolved lawsuits, whether routine collection efforts and partial asset disposals can reverse the situation, fill the funding gap, and prevent the company from delisting remains highly uncertain.

Daily Economic News