Major builder Hoa Binh recovers $12.4 mln in debts from property developer FLC

Vietnam's major construction contractor Hoa Binh Construction Group has recovered about VND304 billion ($12.43 million) in debts from real estate developer FLC Group per court rulings in two lawsuits it won in 2020.

The debt recovery of Hoa Binh, listed on the Ho Chi Minh Stock Exchange (HoSE) as HBC, was completed on October 12. The sum includes more than VND270 billion ($11.04 million) in cash and VND34 billion ($1.39 million) worth of real estate.

The debts were related to the FLC Sam Son ecological urban area project in the central province of Thanh Hoa. In 2014, Hoa Binh and FLC signed contracts to construct the Fusion and Alacarte areas of this project. Hoa Binh completed the contracts at the end of 2015 and these works were put into use.

However, Hoa Binh said by 2020 FLC had not paid its debts, so the contractor filed two lawsuits against FLC at the Cau Giay district People's Court in Hanoi and the Vietnam International Arbitration Center (VIAC).

At the end of 2020, the court and VIAC accepted all Hoa Binh's requests, rejected the FLC counterclaim, and forced the developer to pay debts to the construction firm.

FLC disagreed with the rulings and appealed to the People's Court of Ho Chi Minh City, but this was rejected, forcing FLC to agree on a debt repayment plan.

Recently, Hoa Binh has won a number of debt recovery lawsuits. Also on October 12, the People's Court of Quy Nhon town in the south-central province of Binh Dinh accepted all of Hoa Binh’s requests, forcing Pro Science Co., Ltd., the investor of a hotel project of the same name, to pay more than VND100 billion ($4.09 million) to Hoa Binh. A day earlier, the VIAC also ruled that the Construction & Urban Development JSC must pay Hoa Binh nearly VND162 billion ($6.62 million).

In January 2023, Hoa Binh won a lawsuit against Vietnamese real estate developer Thanh Do related to the construction of a condotel project in Danang city on Vietnam’s central coast.

Per a ruling by the arbitration panel handling the case, Hoa Binh will receive nearly VND367 billion (over $15.6 million) from Hanoi-based Thanh Do in compensation for 12 construction contracts previously given to Hoa Binh in the Cocobay Danang condotel and resort project. To date, the contractor has received VND140 billion ($5.72 million) from the developer.

Debt recovery has become one of Hoa Binh’s strategic actions during the reconstruction period after many quarters of losses and power struggles. It made losses of nearly VND2.59 trillion ($110.3 million) in 2022 and VND713 billion ($29.5 million) in the first six months of this year, according to the company’s audited financial statements.

During its annual general shareholder meeting at the end of May, chairman Le Viet Hai said that among a total of 21 lawsuits regarding late payments, Hoa Binh had won 10.

According to vice chairman Le Viet Hieu, the firm had more than VND1 trillion ($40.9 million) in debt recognized by judgment enforcement units and had so far recovered about half of the sum.

Audited semi-annual consolidated financial statements show that Hoa Binh’s short-term receivables are nearly VND9.1 trillion ($372.1 million), accounting for about two-thirds of its total assets.

On the stock market, HBC closed the Friday session at VND8,550 ($0.35).

Trinh Van Quyet, then chairman of FLC Group, one of Vietnam's leading real estate developers, was arrested on March 29, 2023 on charges of “manipulating” and “concealing information in securities activities”.