LDK Solar Co., Lt is being sued by creditor banks for overdue loans of around 100 million yuan ($16.05 million), the 21st Century Business Herald reported.
A source close to the situation said the plaintiffs were mainly small city commercial banks, rather than LDK's major creditors, such as Bank of China, China Construction Bank and Agricultural Bank of China.
The Jiangxi-based company has borrowed over 15 billion yuan from domestic banks, including 8.15 billion yuan short-term bank loans, 3.8 billion yuan non-current liability maturing in less than one year and 3.2 billion long-term loans.
To boost creditor confidence, the indebted firm has sold a stake amounting to 19.9 percent of its outstanding shares to state-backed Heng Rui Xin Energy, for around $23 million.
However, the New York Stock Exchange has warned LDK to bring its average ADS closing price above $1.00 within six months, or delisted.
Just last month, LDK received a fresh injection of about 700 million yuan ($112.07 million), as part of the government’s rescue plan for the Chinese photovoltaic (PV) industry.
On May 2, the provincial government came to an agreement with LDK Solar. According to a report in the official Shanghai Securities News, the local government pressured state-owned banks into approving a loan package worth 2 billion yuan for LDK Solar.