Narada Power faces creditor bid for court-led restructuring

Zhejiang Narada Power Source Co., Ltd. (ST Narada) is facing a creditor application for pre-reorganization and reorganization, adding a new layer of uncertainty to the Chinese energy storage company’s liquidity crisis.

The Shenzhen-listed company said on July 8 that creditor Zhejiang Huazheng Energy Materials Co., Ltd. had applied to the Hangzhou Intermediate People’s Court to begin pre-reorganization and reorganization proceedings. The creditor cited Narada’s inability to repay due debts while arguing that the company still has restructuring value.

Narada Power said it had not received any court document accepting the application as of the announcement date. It stressed that acceptance of a pre-reorganization application would not mean the company had formally entered judicial reorganization and that both court acceptance and the final outcome remain uncertain.

The filing follows a series of financial and operational setbacks. On May 6, Narada disclosed overdue debts of about CNY 551.8 million ($81.4 million), equal to 39.05% of its audited 2025 net assets. The overdue amount included CNY 271.1 million owed to financial institutions and CNY 280.8 million in overdue commercial bills to suppliers.

The pressure has since widened. According to company disclosures, Narada Power and its subsidiaries had 163 bank accounts frozen as of July 6, with requested freezing amounts totaling about CNY 3.07 billion, equal to 216.99% of audited net assets. The company and its subsidiaries also recorded 66 litigation and arbitration cases over the previous 12 months involving about CNY 315 million.

Narada Power’s crisis is rooted in both business deterioration and internal control problems. The company reported a net loss attributable to shareholders of CNY 1.50 billion in 2024 and CNY 2.64 billion in 2025, followed by a further CNY 305 million loss in the first quarter of 2026. Its asset-liability ratio rose above 90%, leaving limited room to absorb further cash-flow shocks.

A major drag has been Anhui Huabo Renewable Resources, a recycled lead business Narada acquired in 2015 and 2017 as part of an effort to build a closed-loop lead-acid battery supply chain. The business shifted from a profit contributor to a loss-making operation as lithium batteries displaced lead-acid batteries in key applications. Narada twice failed to divest the unit, and Huabo halted operations in April 2026, triggering substantial impairment losses.

Reorganization could still offer a route to stabilize the company. Under China’s corporate bankruptcy framework, a creditor may apply for reorganization when a debtor cannot repay due debts and lacks clear repayment capacity, provided there is restructuring value and a feasible plan. For Narada, that value lies mainly in its lithium battery and energy storage business.

Narada’s reports show the company’s communications and data center storage revenue reached CNY 3.74 billion in 2025, while power storage revenue totaled CNY 1.85 billion. Public reports also cited CNY 8.9 billion in undelivered orders as of October 2025, including CNY 5.5 billion for grid-scale storage.

However, reorganization is not guaranteed to rescue the company. If the court accepts the case, Narada will need creditor approval for a reorganization plan and may require new strategic investors, debt concessions, and liquidity support. If the process fails and the company is declared bankrupt, it could face liquidation and delisting.