Litigation amount exceeds 4 billion yuan, outstanding obligations over 7.7 billion yuan! Former environmental protection giant mired in litigation quagmire, negative net assets may face "*ST" designation

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

On the evening of March 12, Enlight Environment announced that, as of now, the company and its controlling subsidiaries have a total of 4.088 billion yuan in litigation and arbitration claims, accounting for 170.20% of the company’s latest audited net assets. Meanwhile, the amount of previously adjudicated or settled but unpaid claims has reached 7.737 billion yuan.

More critically, according to the earnings forecast, Enlight Environment expects a net loss of 2.2 to 2.7 billion yuan after excluding non-recurring gains and losses for 2025. The company’s end-of-year net assets attributable to the parent could fall below zero, with 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 (*ST) after the 2025 annual report is disclosed.

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

In this battle of maintaining its listing amid mounting litigation and debt pressure, whether Enlight Environment can successfully turn the tide has become a focus of the capital market.

Deepening Litigation Quagmire: Over 4 Billion Yuan in Unresolved Cases

The litigation storm facing Enlight Environment is intensifying.

On the evening of March 12, the company issued an announcement titled “Progress of Litigation (Arbitration) Cases,” showing that, to date, the company and its controlling subsidiaries have a total of 543 million yuan in unresolved cases related to administrative litigation, 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 other issues.

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

Additionally, the announcement states that some previously litigated or settled cases involving the company and related subsidiaries have now reached judgments or settlements, with outstanding amounts totaling approximately 7.737 billion yuan.

A Daily Economic News reporter observed that these massive litigation cases are not just numbers on paper; many have entered the enforcement stage, directly impacting the company’s liquidity.

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

In a February announcement, the company mentioned that due to a forced execution application by Hunan Jinsha Road and Bridge Construction Co., Ltd., the Shaanxi Xianyang Intermediate People’s Court froze and allocated bank deposits of Xingping Hongyuan Development Construction Co., Ltd. and Enlight Environment totaling 520 million yuan, or may seize, extract, seal, or confiscate 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 the previous year.

Furthermore, the core subsidiary’s equity has been subject to seizure and valuation. 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 Enlight Environment, in a dispute over a construction contract with Zijiang Group. The court also applied for valuation and auction of this equity.

Meanwhile, multiple cases involving Enlight Environment have been escalated or resumed enforcement: 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 by the Xi’an Intermediate People’s Court; and a construction dispute involving Shaanxi Wanyue Industrial Co., Ltd. was transferred from Yanliang District Court to the Xi’an Intermediate People’s Court for enforcement.

These frequent litigation and enforcement actions highlight the severe external debt collection pressures facing Enlight Environment.

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

The heavy litigation burden has directly undermined Enlight Environment’s financial fundamentals.

According to the company’s January disclosure of the 2025 earnings forecast, preliminary estimates by the finance department suggest a net loss of 2.8 to 3.5 billion yuan attributable to shareholders in 2025; after excluding non-recurring gains and losses, the net loss is expected to be between 2.2 and 2.7 billion yuan.

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

The reasons for such a large projected loss include: judicial auction of some controlling subsidiaries’ equity, resulting in significant investment losses; continued growth of receivables leading to substantial credit impairment provisions; incomplete settlement of transferred assets and underperformance of some projects, resulting in asset impairment losses; overall debt pressure, overdue debts, heavy financial costs, and penalties such as interest and breach fines.

In response to the current situation, Enlight Environment’s management stated in the March 12 announcement that, given the large overall litigation amount and the fact that some cases are entering enforcement stages, the company is actively working to resolve litigation and enforcement risks, communicating with relevant parties to seek prompt and proper resolution of the cases.

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

(Article source: Daily Economic News)