HSBC has recently filed a winding up application on China Fishery to the High Court of Hong Kong. It pertains to china Fishery’s (CF) difficulty in servicing its debts. From China Fishery’s AR 2014, it can be seen that China Fishery had US $303 Mil of debts which needs to be settled within this FY and it has paid US $131 Mil thus far. Similarly, in the financial year before, CF had a US $505 Million debt but was successfully rolled over.

Chna Fishery’s Debt Profile

The trouble it seems is that one of its 5 lenders, HSBC, is refusing to continue to roll over its debts. One problem with CF is its inability to have a quick cash conversion cycle. It takes a while to convert inventories to receivable and then to cash. With one bank no longer allowing this revolving credit game, CF is experiencing cash flow problems…