The Beijing-based instant noodle maker Wugudaochang has submitted a bankruptcy restructuring application to Beijing Fangshan People's Court.
According to local media reports, a judge from the court said that Wugudongchang was required to make a debt restructuring plan and its creditors could declare their losses to the court within 40 days. The plan should be approved by the creditors or the company would face bankruptcy.
Under Chinese law, a company on the brink of bankruptcy can hold off its creditors and continue operations if it can find a way to restructure its finances. Therefore, the fate of Wugudaochang will mainly rely on its restructuring plan. According to statistics provided by Wugudaochagn, by August 31, 2008, the company had total assets of about CNY100 million while its debts were about CNY600 million.
The main reason for Wugudaochang's problems is because of the continued deterioration of operating conditions. At present, the company's many plants around China have suspended operations and only those in Jiangxi and Shandong are still running.
Wugudaochang is one of the Chinese instant noodle makers that focuses on uncooked noodles. Launched in 2005, its products soon gained the customer recognition. However, the company said that higher raw material prices and advertising costs had led to the current situation.