(Yicai) May 15 -- Neta has not filed for bankruptcy or taken any such related steps internally, an insider said following an application against the electric vehicle brand of Chinese carmaker Hozon New Energy Automobile.

An advertising agency has exercised its legal right to file a bankruptcy review against Hozon Auto, the source at Neta also told Yicai yesterday, without sharing any further details.

Shanghai Yuxing Advertising has filed a bankruptcy review case against Hozon Auto, according to a notice posted on the National Enterprise Bankruptcy Information Disclosure Platform on May 13. The case is being handled by a court in Jiaxing, Zhejiang province.

This information quickly spread on social media, prompting some people to assume that Shanghai-based Neta itself had filed for bankruptcy.

Yuxing Advertising was set up in October 2016 with a registered capital of CNY1 million (USD138,000), according to corporate data platform Tianyancha. It had only five employees as of 2023, its annual financial report showed.

Hozon Auto has been involved in 432 legal cases involving around CNY205 million (USD28.4 million) as of yesterday, Tianyancha’s data also showed.

Hozon Auto incurred losses of more than CNY18.3 billion (USD2.5 billion) from 2021 to 2023, according to a listing prospectus it filed with the Hong Kong Stock Exchange last June.

Neta Auto has been mired in wage arrears and layoffs since last October, with founder and Chairman Fang Yunzhou replacing Zhang Yong as chief executive. In an open letter released at the end of last year, Fang admitted that Neta faced operational difficulties and outlined various cost‑reduction and efficiency‑enhancing measures, including changes to its sales channels, 

Neta sold 64,500 vehicles last year. It sold only 159 this January and 377 in February, with both figures down about 90 percent from a year earlier.

Neta is proceeding with its Series E fundraiser, aiming to raise about CNY4 billion to CNY4.5 billion (USD550 million to USD624.4 million), National Business Daily reported. The lead investor is expected to contribute about CNY3 billion, with the proceeds mainly earmarked for fully restoring production and supporting future development, the report said.

Editor: Martin Kadiev