Yunnan Jinggu Forestry unit faces lawsuits, asset freezes, and inventory shortages

Yunnan Jinggu Forestry’s subsidiary, Huiyin Wood, is embroiled in 25 lawsuits related to private lending disputes, totaling approximately CNY 122.183 million in principal, which is 128.47% of the company’s net assets. These cases have led to the freezing of nine of Huiyin Wood’s bank accounts and the halt of its fiberboard and particleboard production lines, severely impacting operations. The company is actively responding to these legal challenges and seeking to recover losses from responsible parties.

Further exacerbating the situation, Huiyin Wood reported an inventory shortage of approximately CNY 19 million. This loss is attributed to Wang Lan-cun, a former actual controller and sales director, who allegedly circumvented internal controls to sell goods and transfer proceeds to personal accounts. The total loss attributable to Yunnan Jinggu Forestry is about CNY 9.69 million, prompting the company to report the case to the police.

Wang Lan-cun is under investigation for suspected embezzlement. The cumulative impact of these lawsuits and inventory losses poses significant uncertainty for Yunnan Jinggu Forestry’s current and future financial performance, with the outcome dependent on court rulings and ongoing investigations.