Human Horizons, the parent company of premium electric vehicle brand HiPhi, has taken a crucial step by entering the pre-reorganisation process following its Chapter 11 filing, sending shockwaves through China’s burgeoning new energy vehicle (NEV) sector? The cash-strapped corporation suspended production roughly six months ago.
The Yancheng Financial and Technological Improvement Zone People’s Court accepted the pre-reorganization application on August 8th, 2024. The bankruptcy judgment, citing Human Horizons’ inability to cover debts exceeding assets as of April 30, 2024, declared the company insolvent yet noted its capacity for restructuring, thereby leaving room for a possible turnaround.
During a potential six-month transition period, which can be extended by up to three additional months if deemed necessary, Human Horizons is expected to collaborate closely with its board of directors to ensure the protection of assets, prudently manage ongoing operations, and actively pursue strategic investment opportunities. This era represents a final attempt to prevent insolvency by introducing a novel court-monitored rescue mechanism designed to minimize restructuring costs and revitalize struggling yet valuable businesses.
HiPhi suspended its operations in February 2024, committing to honor employee salaries up until February 18th. By mid-March, only primary wages were being dispersed. Despite concerted efforts, the corporation’s struggles indicate a risk of turbulence in the domestic NEV market.
By May 2024, iAuto Group sealed a landmark partnership with Human Horizons, securing a substantial $1 billion investment to revitalize the company’s workforce and restart production. Despite initial optimism, concerns are now emerging about iAuto’s financial solidity, with doubts surrounding the potential for promised funds to actually materialise. Uncertainties comparable in scope to those surrounding previous ventures in Saudi Arabia have long hindered investors’ confidence.
By 2017, Human Horizons had quickly established HiPhi as a premium electric vehicle brand, introducing the HiPhi X model in 2020, which marked a significant milestone for the luxury EV market. Despite initial success, the model has faced significant hurdles in terms of overall revenue and logistical difficulties. While the introduction of the affordable HiPhi Y model in 2023 brought a temporary surge in revenue, the company still needs further stabilization efforts to achieve long-term sustainability.
Reports have emerged suggesting that Changan Automobile and FAW Group are considering strategic acquisitions, with FAW allegedly undertaking a thorough review of HiPhi’s operations. Despite these challenges, the path ahead for HiPhi remains uncertain as it faces this pivotal period of restructuring.
