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On November 18th, the Intermediate People’s Court of Shenzhen issued three announcements, ruling that Shenzhen Royole Technology Co., Ltd. (referred to as “Royole Technology”), Shenzhen Royole Electronics Co., Ltd. (referred to as “Royole Electronics”), and Shenzhen Royole Display Technology Co., Ltd. (referred to as “Royole Display”) have gone bankrupt.
According to the investigation results of the existing assets and liabilities of Royole Electronics, Royole Technology, and Royole Display by the administrators, it is determined that they are unable to repay their due debts and their assets are insufficient to settle all debts. In accordance with Article 2(1) and Article 107 of the Enterprise Bankruptcy Law of the People’s Republic of China, on November 18th, 2024, the court ruled for bankruptcy proceedings against these three companies.
Established in 2012, Royole has been in operation for twelve years. Its proud flexible screen technology is known as “Ultra-Low-Temperature Non-Silicon Process Integration Technology” (ULT-NSSP). In 2018, Royole launched the world’s first foldable screen phone ahead of Samsung and Huawei; however, actual sales were only a few tens of thousands units. Some previously disclosed collaborations were proven to be superficial or failed during mass production stages before this bankruptcy announcement was made.
Public information shows that Royole has completed a total of 13 rounds of financing, with the latest round being the F round in May 2020, with a valuation reaching $6 billion at one point. Royole has also sought IPO funding twice, but due to factors such as the pandemic and overly optimistic valuation by the controlling shareholder, both attempts ended in failure.
An insider revealed that during the bankruptcy liquidation stage faced by Royole Technology, creditors and company employees hoped to transform bankruptcy liquidation into bankruptcy reorganization.
After the company entered bankruptcy proceedings, Royole Technology shareholders submitted a bankruptcy reorganization application to the Shenzhen Intermediate People’s Court, pointing out that there are potential reorganization investors willing to invest in order to restore the vitality of the company’s production line. The reorganization investors have already submitted an investment letter of intent to the Shenzhen Intermediate People’s Court, but the application was ultimately ruled inadmissible.
Royole Technology is about to face asset auctions, but due to the unclear debt distribution plan and most of Royole’s assets have been mortgaged to banks, how the proceeds of the auction will be distributed still needs to be resolved by multiple parties such as administrators, courts, and government.
However, informed sources mentioned that the asset value of Royole Technology is highly likely insufficient to repay the amount owed to mortgage creditors. After Royole Technology’s assets are auctioned off and mortgage creditors receive compensation, it is possible that employee claims may not be paid.
Several remaining employees at Royole Technology stated that after Royole started delaying salary payments in November 2022, some retained employees are still maintaining normal operation of the display production line. Currently, employees’ livelihoods are still affected and the issue of unpaid wages has not been further clarified.
Royole Technology currently has debts exceeding 4.7 billion yuan with wage arrears totaling over 60 million yuan. In addition to previously promised stock options, total outstanding remuneration amounts to 160 million yuan.
SEE ALSO: Flexible Display Maker Royole Sees $5.3M in Assets Frozen