The bankruptcy of Guangzhou International Trust and Investment Corp (Gzitic) moved a significant step closer yesterday after the city's vice-mayor, Shen Bainian, insisted for the second time he was prepared to let the company go under. His comments contradict a statement to the company's creditors last week by Gzitic's deputy general manager Guan Yibo that the firm would be restructured to keep it afloat. Gzitic - the investment arm of the Guangzhou municipal government - has outstanding foreign debts estimated to exceed US$500 million. The contradictory statements have backed growing signs of a divide between the company's management and the Guangzhou government over whether to keep Gzitic in business. Mr Shen, speaking to the official Laodong Daily, said the company's fate hinged on the results of an investigation expected to clarify the financial institution's debts and assets in the next two months. 'Afterwards, we will comprehensively assess the next step in dealing with Gzitic,' he said. 'If the results of Gzitic's clearing show capital seriously lower than debt, it will also go bankrupt.' Mr Shen said the city government had lent Gzitic three billion yuan (about HK$2.79 billion) to repay and service foreign debt from the end of 1997 into early last year 'but it still had difficulty repaying all debts in the short term'. Mr Shen's tough stance echoes earlier comments made at the end of last month in which he insisted the company would be allowed to fail if its debts outstripped its assets. Those comments prompted Gzitic to put out its own statement saying an accountant and merchant bank would be appointed by the middle of next month to help devise a restructuring plan. Gzitic officials also said at the time that updated asset and liability figures would be ready by next month or April and asked for patience from creditor banks, some of which threatened to sue. Debt-repayment problems began to surface at Gzitic soon after the closure of Guangdong International Trust and Investment Corp. Gzitic's assets are put at more than 20 billion yuan, against debts of about 19 billion yuan. Gzitic has been disposing of assets recently to repay domestic creditors. Earlier this month, the Anhui Higher People's Court ordered Gzitic to transfer its stake in Guangzhou Securities to settle part of a 48 million yuan debt owed to Anhui International Trust & Investment Corp. Luoyang Glass and Guangzhou Shipyard took possession of Gzitic properties as repayment on outstanding lending. Despite these efforts, Gzitic's future was called into question after its SAR finance arm - Guangzhou Finance - was forced into liquidation. That action also cast a cloud over red chip Gzitic Hualing Holdings, which will see a change of control as a result. Gzitic holds 50.9 per cent of its Hong Kong-listed arm through Guangzhou Finance. The parent had already pledged 90 per cent of its 57.89 per cent shareholding in Gzitic Hualing to obtain loans.