(Yicai Global) Feb. 13 -- The founder of China Huiyuan Juice Group and his daughter have both resigned from their positions on the board of the country's largest private juice provider, as a mountain of debt threatens to engulf the business empire they started from scratch.
As of yesterday, Zhu Xinli has stepped down as chairman and executive director and his daughter, Zhu Shengqin, has resigned as executive director, the Beijing-based company said. Executive Director Ju Xinyan has been appointed chairwoman.
The departures follow an announcement on Jan. 31 that neither Chairman Zhu nor any other board members had been aware of the circumstances concerning a suspect loan extended to one of its units back in 2017 that the Hong Kong stock exchange is currently investigating. As of June 2017, Huiyuan had debts of CNY51 billion (USD1.6 billion).
"Someone must have been responsible for the loan," a food sector insider told the China News Service. So it is not surprising that both father and daughter have resigned.
Zhu Xinli's departure might clear the way for an injection of cash, said Zhu Danpeng, a food sector analyst. Many businesses and investors are still optimistic about the Beijing-based company and Huiyuan Juice needs money to resolve its debt crisis.
The beverage maker has been in hot water with the Hong Kong stock exchange since 2017 when it was found to have lent CNY4.2 billion (USD601.4 million) to its unit Huiyuan Beijing Holdings, raising questions among investors and regulators as to why the funds weren't used to pay back arrears.
Huiyuan attributed the loan, which ran until March 2018, to the firms' efforts to gain some 10 percent interest on repayments. But securities regulators in Hong Kong reprimanded the firm for not receiving board approval for the loan and for failing to announce the deal to investors at the time. The bourse suspended trading in Huiyuan's shares in early April 2018 and an independent investigation was launched.
Editor: Kim Taylor