Bankrupt Bohai Steel ordered by China's Tianjin government to begin restructuring by end of September: Reuters

The government of the Chinese city of Tianjin, the only shareholder of bankrupt Bohai Steel Group, is demanding that Bohai’s creditors and strategic investor implement a bankruptcy restructuring plan by the end of September, two creditor sources with direct knowledge of the matter said.

Bohai Steel, a former Fortune Global 500 company that was founded by the Tianjin municipal government in 2010 by merging four local steelmakers, collapsed in 2016 with more than 200 billion yuan ($28.4 billion) in unpaid debt, the biggest bankruptcy restructuring in China’s history.

The company’s demise followed years of overexpansion fuelled by easy credit that left it heavily leveraged when steel prices plunged to record lows in 2015.

The implementation of Bohai’s bankruptcy restructuring plan, which was approved by a local court in January, has been delayed over a power struggle between the Tianjin government, creditors and investors, as well as the local government’s fears of losing state-owned assets and jobs, the sources said.

However, financial pressures from local banks and concerns about the city’s own debt burden have created a new sense of urgency for the Tianjin government to start the Bohai Steel restructuring as soon as possible, they said.