Source: Dongwen Finance The glory days of 'South Yurun, North Shuanghui' are long gone. It is lamentable that Yurun Group, once the 'King of Pork' and a giant with hundreds of billions in assets, has now been reduced to bankruptcy reorganization! 'South Yurun, North Shuanghui' was Yurun's market position back then. As one of the largest meat processing enterprises in China, Yurun Group boasted a string of dazzling titles and a massive industrial scale, having diversified into real estate, finance, and other sectors. Its slaughtering capacity ranked first globally for many years, and it was known as one of the 'Three Swordsmen' of the industry alongside Shuanghui and Jinluo. Its founder, Zhu Yicai, started from scratch with just 200 yuan to build a 150 billion yuan 'pork empire,' becoming the richest man in Jiangsu Province. He was truly riding high! However, since 2010, Yurun Group has been on a downward trajectory: food safety crises erupted, over-diversification led to a broken capital chain, it was gradually overtaken by competitor Shuanghui Development, and the founder was placed under residential surveillance for four years. A series of negative factors cascaded like dominoes, ultimately pushing this giant into the abyss and bringing the group to the brink of bankruptcy. Once one of China's most prominent private enterprises, it now owes over 100 billion yuan, and 122 companies under the 'Yurun system' have had no choice but to file for bankruptcy reorganization to save themselves. Now that Yurun Group has undergone bankruptcy reorganization, where will it head in the future? Can this former giant make a comeback? Recently, Yurun, burdened with over 100 billion in debt, announced its latest restructuring plan. If approved, it could be a 'resurrection' for Yurun. On November 29, the second creditors' meeting for the reorganization of Yurun Group, a leading domestic meat food company, was held online. This meat industry leader, once on par with Shuanghui, will repay debts through methods such as 'cash repayment, installment repayment with retained debt, and debt-to-equity swaps,' ensuring full coverage of principal and interest, avoiding debt evasion, and maximizing protection of creditors' interests. It is reported that under this restructuring plan, the equity of 275 companies under the 'Yurun system' will be adjusted to the 'Yurun Select' securitization platform through shareholder rights adjustments, capital contributions from Yurun Holdings, and gifts, while introducing a strategic investor—China Huarong—with an additional investment of about 3 billion yuan. The specific debt repayment plan is as follows: ordinary claims under 300,000 yuan will be repaid in cash within one year after the plan is approved; claims under 3 million yuan will be repaid in cash within five years; claims over 3 million yuan will be converted to equity at 17.8 yuan per share. Yurun has shown considerable sincerity in this debt restructuring plan. According to audit results, the total asset value of all companies included in Yurun's restructuring plan is approximately 127 billion yuan, with net assets of about 9 billion yuan, including 100% equity of Yurun Holdings, all stocks of two listed companies—Central Mart and Yurun Food—and other high-quality resources outside the system, to ensure the smooth implementation of the restructuring plan and debt repayment. In addition, the 'Yurun Select' securitization platform has committed to achieving a net profit of no less than 5 billion yuan by 2026 and applying for an IPO by 2027. According to insiders, the vast majority of creditors have approved Yurun's restructuring plan. Currently, 750 of the 825 creditors have voted in favor, an approval rate of nearly 91%. With this, the meat food leader, long plagued by debt, is expected to open a new chapter in the near future. According to audits by BDO China, the 122 Yurun-affiliated companies included in the substantive consolidated reorganization are severely insolvent, with total liabilities exceeding 100 billion yuan, book assets of about 50 billion yuan, appraised asset value of about 65 billion yuan, and liquidation value of 30 billion yuan. Because many companies are involved in the reorganization, and Yurun Group's own liabilities have exceeded 9 billion yuan, the threshold for recruiting investors was initially very high. The minimum registered capital requirement for prospective restructuring investors of Yurun Group is no less than 10 billion yuan, and the asset scale of the investor or its parent group must be no less than 1 trillion yuan. Such a high threshold of trillion-level assets has kept most capital at bay, so the restructuring cycle has been relatively long! On June 23, the first creditors' meeting for the bankruptcy reorganization of 122 companies under Yurun Group was held online. According to the bankruptcy administrator, two prospective restructuring investors met the bidding conditions: Ping An Trust Co., Ltd. and China Huarong Asset Management Co., Ltd. Jiangsu Branch. According to the official website, Yurun Group is a private enterprise group integrating seven major industries: food, real estate, commerce, logistics, tourism, finance, and construction. It owns two listed companies: Yurun Food (01068.HK) and *ST Zhongshang (600280.SH). The financial data of these two listed companies clearly show that Yurun Group is currently facing a severe crisis. Although Yurun Group is involved in many businesses, its most well-known is its food business. As one of China's largest meat product manufacturers, Yurun, along with Shuanghui Development and Jinluo Group, is known as the 'Three Swordsmen' of China's meat product industry. Years ago, after the chaotic brand wars in the domestic meat product industry, a competitive landscape of 'South Yurun, North Shuanghui' emerged, with the two leading enterprises once engaged in a fierce battle for the top spot. Yurun was also a star enterprise in Jiangsu. In 2014, Yurun Group ranked 5th among China's top 500 private enterprises, with annual sales of nearly 150 billion yuan. Founder Zhu Yicai ranked 27th on the 2003 Forbes China Rich List, becoming Jiangsu's richest man. It is such a once-famous brand that has gradually disappeared from public view in recent years. People have almost forgotten that they once ate Yurun pork or ham sausages. As a former star enterprise in Jiangsu, its story of rising from 200 yuan to 150 billion yuan is still often praised today, a true legend of Jiangsu. From an unknown rural boy to the richest man in Jiangsu with a billion-yuan 'pork empire,' Zhu Yicai took only six years. The Yurun Group he founded was once Asia's largest meat processing enterprise, overshadowing Shuanghui at its peak. Zhu Yicai, worth 31.5 billion yuan, was hailed as the 'King of Pork.' However, after 30 years of painstaking management, Yurun's fortunes collapsed within a year. The 122 companies under the 'Yurun system' were forced into bankruptcy reorganization, and Zhu Yicai went from a personal fortune of 31.5 billion yuan to debts exceeding 100 billion yuan... (See 'From 200 Yuan to 150 Billion and Then Selling Buildings to Pay Debts: The Rise and Fall of the Former Richest Man in Jiangsu!') It can be said without hesitation that Zhu Yicai's ambition made Yurun and himself, but it also led to today's tragic situation of bankruptcy reorganization and selling buildings to repay debts. In previous years, Yurun Group expanded aggressively in food, real estate, and commerce, but its main business of meat products failed to keep pace with expansion, and sideline businesses like real estate dragged down the main business, leading to massive losses. Since March 23, 2015, when Yurun Group's actual controller Zhu Yicai was placed under residential surveillance, many senior executives of Yurun Food and Central Mart resigned, and the company fell into a debt crisis. The prolonged disappearance of founder Zhu Yicai triggered financial institutions to withdraw over 15 billion yuan from Yurun in a short period, causing liquidity depletion, a broken capital chain, and rapid business deterioration—the main causes of Yurun Group's debt crisis. During the four years Zhu Yicai was in trouble, main competitor Shuanghui quickly captured the low-temperature meat market, achieving its highest revenue in a decade in 2019 at 60.348 billion yuan, while Yurun Food's revenue for the same period was only 13.638 billion yuan. It was also during this period that Yurun Food's competitive position in the low-temperature meat segment plummeted. According to Yurun Food's annual report data, the company's cumulative losses from 2015 to 2020 reached as high as 18 billion Hong Kong dollars. Yurun's *ST Zhongshang also fared poorly, even resorting to selling its department store building to repay 300 million yuan in debt! The glory days of 'South Yurun, North Shuanghui' are long gone. Now, Yurun's subsidiary is selling buildings to repay debts, and Yurun Group is facing bankruptcy reorganization. Facing the double blow of poor performance from both listed companies, where will Yurun Group go? In reality, Yurun's overall development situation is not as dire as it seems. Although it is in bankruptcy reorganization, it continues to operate. Since 2020, when the founder returned to the group, losses have decreased significantly compared to 2019. Although net profit attributable to shareholders in 2020 was less than 60 million yuan, it was the first profit in three years. If all parties can provide some support, Yurun Group still has hope of turning losses into profits. Yurun Group has also released a new logo, possibly symbolizing a fresh start. The entity of Yurun Group is still relatively strong; as long as it can complete the reorganization as soon as possible, the road ahead will be much smoother. As one of the largest meat processing enterprises in China, Yurun's bankruptcy reorganization is of great significance. If Yurun Group's restructuring plan can be approved, it will be a key step for the company to overcome its difficulties. More seriously, if the restructuring plan is not approved, Yurun's only option would be to go through court bankruptcy proceedings. In that case, the recovery rate for ordinary claims would be only 6.62%, and the recovery rate for secured priority claims would be less than 40%. Yurun's over 30,000 employees could face unemployment, and the livelihoods of tens of millions of farmers and pig farmers would be affected. We look forward to the success of Yurun's restructuring plan and the day when the 'King of Pork' makes a comeback! References: 'Yurun Restructuring Plan Released, China Huarong Provides 3 Billion Yuan Support', Jiemian News 'From Pig King to Debt of 100 Billion: How Did Yurun Group Fail?', Qingliu Plus 'Latest! Liabilities of 127 Billion Yuan! Yurun Asset Restructuring Plan Announced!', Food Observer 'Yurun Bankruptcy Reorganization: Founder's Return Fails to Save It, Prospective Restructuring Party Emerges', Yicai 'Yurun Restructuring Plan Announced: Actual Controller Provides Guarantee, Full Coverage of Principal and Interest', Xinhua News Agency Are you 'watching' me?