(Yicai Global) July 6 -- Shares in Suning.com plunged by the exchange-imposed limit today after the struggling Chinese electrical appliance retailer refuted a report that a group of disgruntled suppliers have applied to a local court for the firm to be declared insolvent and its affairs to be wound up.

Suning’s share price [SHE:002024] was trading down 4.95 percent at CNY2.11 (USD0.32) as of 12 noon China time. For companies under observation, their daily trading limit is set at 5 percent in either direction, half the usual limit.

Business continues as normal and is even improving, Suning said on its Twitter-like Weibo account today. The Nanjing-based firm will investigate the legality of these reports, it added.

Some suppliers filed a lawsuit against Suning to the Intermediate People’s Court of Nanjing on July 4 declaring it to be bankrupt and insolvent with the help of the Zhongcheng Institute’s Crucial Case Center and related law firms, the Beijing-based provider of legal services said yesterday. Their case has been registered at the court, it added.

The matter has to do with overdue arrears amounting to CNY2.6 million (USD390,572). The creditors are claiming that they reached an agreement with Suning at the Nanjing court in December last year that Suning should make a first repayment by Jan. 21 and to repay the remainder in 10 separate monthly instalments over the course of the year. However, Suning's first repayment has allegedly not been fully paid. No further details were given.

Last year, Suning reported an almost eight-fold widening of its losses from 2019 to CNY44.6 billion (USD6.6 billion), bringing its total liabilities to CNY139.7 billion (USD20.8 billion) and giving it a debt-to-asset ratio of 81.8 percent. The retailer still needs to recover CNY32.9 billion (USD4.9 billion) of unpaid bills, it said in its annual earnings report.

Suning's financial crisis is largely due to overaggressive expansion – the company bought an 80 percent stake in hypermarket chain Carrefour China in September 2019 – and the fallout from the Covid-19 pandemic which greatly reduced footfall to its brick-and-mortar outlets. Last July it was part of a government-led bail out, selling a 17 percent stake for CNY8.8 billion (USD1.4 billion).

Editor: Kim Taylor