Huayang New Material Transfers 60,000-ton PBAT Plant for 1 Yuan, Sued by Creditor Pursuing 15 Million Yuan in Construction Payments

On July 16, 2026, Huayang New Material (600281) completed the disposal of a related-party asset, transferring 100% equity of its wholly-owned subsidiary to controlling shareholder Taihua Group for 1 yuan. The core of the target is a 60,000 t/yr PBAT plant project built at a cost of 570 million yuan. The company has formally exited the biodegradable materials sector, marking the failure of its five-year all-in bet on the PBAT track.

On August 4, Huayang New Material (600281) announced that, because it transferred 100% equity of its wholly-owned subsidiary Shanxi Huayang Biodegradable New Materials Co., Ltd. ("Bio New Materials") to controlling shareholder Taihua Group for a price of 1 yuan, it was sued by creditor Shanxi Yunzhuo Construction Group Co., Ltd., which demands the revocation of the equity transfer agreement.

Target valuation: Bio New Materials is the core platform of Huayang New Material's biodegradable plastics layout, with a 60,000 t/yr PBAT production line, mainly engaged in PBAT biodegradable materials and products. Dragged down by falling industry prices and insufficient capacity utilization, the subsidiary has posted sustained large losses. As of the end of 2025, its total assets were 355 million yuan, total liabilities 459 million yuan, net assets -104 million yuan, and its appraised equity value was negative.

Background of the event: In April 2026, Huayang New Material announced a plan to transfer 100% equity of Bio New Materials to controlling shareholder Taihua Group for a consideration of 1 yuan, with the aim of divesting the loss-making asset and easing the drag on the listed company's performance. The transaction has been reviewed and approved by the shareholders' meeting, the payment has been completed, and the industrial and commercial registration change procedures are being advanced.

Plaintiff's claim: Yunzhuo Construction contracted two projects for Bio New Materials in 2022 and 2023, and 15.1964 million yuan in construction payments remains uncollected. The plaintiff holds that Huayang New Material's divestiture of the asset for 1 yuan constitutes an evasion of debt and infringes on the interests of creditors.

Litigation requests: The court is asked to revoke the equity transfer agreement, order Taihua Group to return the equity and register it under the name of Huayang New Material, and have the three defendants bear the litigation costs.

Case progress: 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, and the case has not yet gone to trial.

Company response: Huayang New Material stated in its announcement that, since the case has not yet gone to trial, it is temporarily unable to determine the specific impact of the litigation on profit for the current period and subsequent periods. Previously, the company completed shareholder meeting review in April 2026 and completed the industrial and commercial registration change in July, aiming to divest the loss-making asset and improve performance.

Industry takeaways:

1. In recent years, a number of PBAT projects have come on stream, the sector has become intensely competitive, and many newly built capacities have fallen into losses. Huayang's 60,000-ton PBAT project has dragged on the listed company's financial statements ever since it started production; the 1-yuan transfer is a typical case of divesting a loss-making asset in the biodegradable materials field on the A-share market.
2. The maneuver of "transferring negative net assets to the major shareholder for 1 yuan" is not uncommon on the A-share market, but this case exposes a risk point: even if the transaction valuation is compliant, it will still run into the legal risk of existing creditors exercising the right of revocation. Once a court rules to revoke the equity transfer, it means the loss-making PBAT subsidiary will be loaded back into the listed company.
3. Implications for the industry chain: Asset-heavy biodegradable plastics projects involve large upfront infrastructure investment; once the market falls short of expectations, they easily generate large debts, and subsequent asset disposal will face complex legacy issues of debt and litigation.