Huayang New Material Hit by Creditor Claim for 15.1964 Million Yuan After 1-Yuan Transfer of 60,000 t/yr PBAT Plant

On July 16, 2026, Huayang New Material (600281) closed a related-party asset disposal, handing 100% equity of its wholly-owned subsidiary to controlling shareholder Taihua Group for just 1 yuan. At the heart of the deal was a 60,000 t/yr PBAT plant that had been built for 570 million yuan. With the transaction completed, the company has officially left the biodegradable materials business, ending a five-year PBAT gamble in failure.

In an August 4 announcement, Huayang New Material (600281) said it is being sued by creditor Shanxi Yunzhuo Construction Group Co., Ltd. The lawsuit follows the company’s 1-yuan transfer of 100% equity in Shanxi Huayang Biodegradable New Materials Co., Ltd. (“Bio New Materials”) to controlling shareholder Taihua Group. The creditor is asking the court to revoke the equity transfer agreement.

Valuation of the target: Bio New Materials served as Huayang New Material’s main platform for compostable and biodegradable plastics, operating a 60,000 t/yr PBAT line focused on PBAT materials and products. Weak industry pricing and low capacity utilization kept the unit deep in losses. By the end of 2025, total assets stood at 355 million yuan, total liabilities at 459 million yuan, net assets at -104 million yuan, and appraised equity was negative.

The deal’s background dates to April 2026, when Huayang New Material announced plans to transfer 100% of Bio New Materials to Taihua Group for 1 yuan. The stated goal was to remove the loss-making asset and reduce the drag on the listed company’s results. Shareholders approved the transaction, payment has been made, and industrial and commercial registration changes are underway.

The plaintiff’s case: Yunzhuo Construction took on two projects for Bio New Materials in 2022 and 2023. It says 15.1964 million yuan in construction payments is still outstanding. In its view, Huayang New Material’s 1-yuan divestiture amounts to debt evasion and harms creditor interests.

The litigation seeks a court order to cancel the equity transfer agreement, require Taihua Group to return the equity and re-register it under Huayang New Material’s name, and make the three defendants cover litigation costs.

Case status: the Pingding County People’s Court of Shanxi Province has accepted the case. Huayang New Material received the notice of response on August 3, 2026. No hearing has been held yet.

Company response: Huayang New Material said that because the case has not yet gone to trial, it cannot currently determine the precise impact on profit for the current or later periods. The company had completed shareholder meeting review in April 2026 and the industrial and commercial registration change in July, aiming to divest the loss-making asset and improve performance.

Industry takeaways:

1. As multiple PBAT projects have started up in recent years, competition has intensified and many newly built capacities are loss-making. Huayang’s 60,000-ton PBAT project weighed on the listed company’s financial statements from the start of production, making the 1-yuan transfer a notable A-share example of exiting a loss-making asset in biodegradable materials.
2. Transferring negative-net-asset units to a major shareholder for 1 yuan is not uncommon on the A-share market. This case highlights a legal risk: even a compliant valuation can still face a creditor’s right of revocation. If a court revokes the transfer, the loss-making PBAT subsidiary would return to the listed company.
3. For the supply chain, biodegradable plastics are asset-heavy projects with high upfront infrastructure costs. If market demand falls short, large liabilities can build up, and later asset disposal may leave complex debt and litigation issues.