Two subsidiaries of Jiu Rong Holdings (02358) have been served with notices of complaint by a local court. The notification was received on July 3, 2026, from the Shangcheng District People's Court in Hangzhou.
The legal action was initiated by Shanghai Pudong Development Bank Co., Ltd., Hangzhou Branch, against two defendants: Zhejiang Jiu Rong Intelligent Technology Co., Ltd. and Jiu Rong New Energy Technology Co., Ltd. Both defendants are indirect wholly-owned subsidiaries of the company. The case, registered under docket number (2026) Zhe 0102 Min Chu 15751, concerns a dispute over a financial loan contract.
According to the civil complaint, the plaintiff has made the following claims: first, that the primary defendant repay domestic letter of credit advance principal amounting to RMB 12,888,000, plus penalty interest of RMB 84,577.5 calculated up to May 18, 2026, with further interest accruing until full payment as per the contract, bringing the total claim to RMB 12,972,577.5; second, that the secondary defendant be held jointly liable as a guarantor for the aforementioned debt; and third, that the defendants bear the litigation costs and related expenses.
The company's board wishes to inform that the case has now entered a court-mandated mediation phase. As per a court-issued 'Agreement to Extend Mediation Period,' both parties have consented to potentially extend the mediation deadline by up to 30 days upon the expiry of the initial period. The group is actively engaging in communication and negotiation with the plaintiff to seek an amicable resolution through mediation.
Following a preliminary assessment, the board believes that due to the overdue debt, the company and its subsidiaries may be liable for corresponding penalty payments and interest charges. Depending on the outcome of the litigation, this could lead to increased financial expenses for the group, further impact its financing capabilities, and exacerbate cash flow pressures.
Despite the ongoing legal proceedings, the group's main business segments continue to operate normally from a commercial standpoint.