Once known as the "first stock in China's film and television entertainment," Huayi Brothers (Huayi 300027.SZ) has recently become a defaulter due to a claim of 600,000 yuan.

According to legal litigation information from Tianyancha, on May 19, ST Huayi was listed as a dishonest person (defaulter) by the People's Court of Chaoyang District, Beijing, for refusing to fulfill obligations determined by an effective legal document despite having the ability to perform. The obligations determined by the effective legal document indicate that the person subject to enforcement should pay the applicant for enforcement a principal and interest totaling approximately 608,400 yuan. In addition, the company and its legal representative Wang Zhongjun have been restricted from high consumption due to this case.

The applicant for enforcement in this case is Jingkaili Consulting Co., Ltd. (Beijing), with a total principal and interest amount of 608,400 yuan, and the company's performance status is completely unfulfilled. In April of this year, the court had already enforced a payment of 600,000 yuan against Huayi Brothers.

This debt of just over 600,000 yuan reflects the harsh reality of Huayi Brothers' severely depleted cash flow. In recent years, the company has been mired in multiple crises, including performance losses, debt defaults, equity being auctioned, and its stock being subjected to risk warnings, with the former film and television giant no longer shining.

Financial data shows that since it first reported an annual loss in 2018, Huayi Brothers has faced performance pressure for eight consecutive years, with cumulative losses exceeding 8.5 billion yuan by the end of 2025.

In 2025, the company achieved operating revenue of 310 million yuan, a year-on-year decline of 33.43%, and a net profit loss attributable to shareholders of 334 million yuan, with the loss scale continuing to expand and the asset-liability ratio climbing to 98.03%.

As of April 1, 2026, its overdue debts to banks and other financial institutions totaled 56.399 million yuan, exceeding 10% of the audited net assets for 2024, while 34 bank accounts were frozen.

On April 29 of this year, Huayi Brothers announced that it achieved operating revenue of 62.6231 million yuan in the first quarter of 2026, a year-on-year decrease of 40.88%; the net profit loss attributable to shareholders of the listed company was 28.7284 million yuan, compared to a net profit of 19.7627 million yuan in the same period last year; basic earnings per share loss was 0.0104 yuan.

Continuous losses combined with overdue debts directly triggered risk warnings under listing rules. Due to the continuous negative net profit excluding non-recurring gains and losses over the last three accounting years, and the audit report indicating significant uncertainty regarding the company's ability to continue as a going concern, Huayi Brothers was officially changed to "ST Huayi" on April 30, subjected to other risk warnings, with delisting risks remaining high.

The actual controllers Wang Zhongjun and Wang Zhonglei have repeatedly been restricted from high consumption, and their equity has been continuously auctioned, further exacerbating the instability of the company's control. On the evening of April 3, Huayi Brothers announced that 11.3 million shares held by its controlling shareholder and actual controller Wang Zhonglei were to be judicially auctioned, accounting for 17.10% of his total shares in the company and 0.41% of the company's total share capital.

The JD Asset Trading Platform shows that on May 6 at noon, the judicial auction of 1.9 million unrestricted circulating shares of Huayi Brothers held by Wang Zhonglei ended, with a starting price of 2.5403 million yuan. After 62 rounds of bidding, Zhuhai Hengqin Tiansheng Equity Investment Partnership (Limited Partnership) ultimately won the shares at a transaction price of 3.7087 million yuan Another controlling shareholder, Wang Zhongjun, has 28 million shares entering the judicial auction process. If the auction is completed and the transfer occurs, the shareholding ratio of the Wang brothers and their concerted actors will drop to 6.85%, still making them the largest shareholder, but with a significant decrease in shareholding ratio.

With the debt crisis piling up, Huayi Brothers has reached a critical juncture for pre-restructuring. On April 23, the Intermediate People's Court of Jinhua City, Zhejiang Province officially initiated the pre-restructuring process for Huayi Brothers, triggered by an advertising debt of 11.4 million yuan.

According to the announcement, creditor Beijing Tai Rui Fei Ke applied to the Intermediate People's Court of Jinhua City, Zhejiang Province for the company to undergo restructuring and pre-restructuring on the grounds that Huayi "cannot repay due debts and is clearly lacking repayment ability, but has restructuring value." The application is based on Huayi Brothers' failure to pay the principal of 11.405155 million yuan for its due debt, which stems from a previous advertising contract dispute between the two parties.

Industry insiders analyze that Huayi Brothers is currently facing not just a single debt issue, but a comprehensive result of long-term operational disorder, imbalanced capital structure, and declining industry competitiveness. While pre-restructuring may bring a glimmer of hope for the company, how to revitalize existing assets, resolve massive debts, and rebuild the profitability model of its main business remains a huge challenge.

Huayi Brothers was founded by Wang Zhongjun and Wang Zhonglei in 1994, officially entering the film and television industry in 1998, and listed on the Growth Enterprise Market in 2009, becoming "China's first film and television stock."

Huayi Brothers once became a benchmark enterprise in the film and television industry with blockbuster films such as "No Country for Old Men," "Assembly," and "Old Pao Er," holding numerous first-line star artists, with its market value approaching 90 billion yuan at its peak.

However, blind mergers and expansions, failed diversification, and the cyclical fluctuations of the film and television industry, combined with its own operational missteps, have gradually led the company into difficulties.

In November last year, Wang Zhonglei and his wife Wang Xiaorong also ventured into the short video field, which was interpreted by the market as an attempt to save themselves through live streaming sales.

To reverse the downturn, Huayi Brothers has hurriedly laid out the short drama track in recent years, launching multiple works. In the second half of 2024, it will establish the "Huayi Brothers Fire Drama" brand, collaborating with Yuewen, Dianzhong Technology, and others, to launch short dramas such as "What Can Save My Brother," "Phoenix Chanting in the Nine Heavens," and "The Chosen One: I Am a Savior in the Dungeon."

This year's highly popular costume drama "Zhu Yu" is produced by Zhejiang Dongyang Haohan Film and Television Entertainment Co., Ltd., which belongs to Huayi Brothers. Tianyancha shows that Huayi Brothers holds 49.25% of the equity in this company, making it the largest shareholder. It is reported that based on the industry-calculated comprehensive revenue of 800 million yuan for "Zhu Yu," Huayi Brothers will obtain a net profit of 80 million to 150 million yuan from it.

However, under the dual pressure of intensified competition in the film and television industry and high debt pressure, whether this established enterprise can emerge from the quagmire and achieve restructuring and rebirth remains highly uncertain