On July 8, 2026, Zhejiang Narada Power Source Co.,Ltd. (ST Narada, SHE: 300068), an established company with nearly three decades in the energy storage sector, announced it has been applied for by its creditor, Zhejiang Huazheng Energy Materials Co., Ltd., to the Hangzhou Intermediate People's Court for preliminary restructuring and restructuring due to its inability to repay due debts.

This development follows the company's recent exposure in April of a major earnings revision and internal control failures, which has already triggered a wave of investor compensation claims. The legal team of lawyer Liu Peng from Shanghai Huzi Law Firm has reportedly received registrations from thousands of affected shareholders.

Significant Downward Revision of Earnings Forecast

Reviewing the financial trajectory of ST Narada, the company reported a loss of 1.497 billion yuan in 2024, with its 2025 financials revealing a full-scale crisis. On April 24, 2026, the company abruptly issued a corrected earnings forecast, drastically revising its previously estimated 2025 net profit attributable to shareholders from a loss of 890 million to 1.25 billion yuan down to a loss of 2.4 billion to 2.8 billion yuan.

The final annual report showed a massive loss of 2.642 billion yuan for the full year 2025, resulting in cumulative losses exceeding 4 billion yuan over two years. More critically, the company's internal controls were found to be deficient. The auditing firm, ShineWing, issued an "adverse opinion" on the company's internal control over financial reporting for 2025, directly pointing to severe financial irregularities.

The auditor highlighted several key issues:

1. Abnormal Large Advance Payments: As of the end of 2025, the company's advance payment balance to a core supplier was as high as 365 million yuan, with cumulative annual prepayments reaching 4.633 billion yuan, yet only goods worth 134 million yuan were received.

2. Unauthorized Loans and Guarantees: The company improperly provided guarantees for 2.364 billion yuan in private lending for a business partner, and these transactions were not subjected to internal approval procedures nor recorded in the accounts.

3. Significant Overdue Receivables: Accounts receivable overdue for more than one year from its fifth-largest customer amounted to 183 million yuan.

Due to the adverse internal control opinion, the company's stock was placed under Other Risk Warning (ST) on April 30, 2026. Subsequently, its share price experienced consecutive 20% daily limit-down drops, resulting in a year-to-date decline of over 70%.

Full-Scale Financial Crisis Erupts

Currently, the company's debt crisis has erupted comprehensively. As of July 2026, a total of 163 accounts belonging to the company and its subsidiaries have been frozen, with applied freezing amounts totaling approximately 3.067 billion yuan, accounting for 216.99% of the company's most recently audited net assets.

The asset-liability ratio has climbed to 92.14%, with short-term borrowings reaching 4.513 billion yuan. In contrast, monetary funds stand at only 1.634 billion yuan, a significant portion of which is restricted. Furthermore, the company has been involved in 66 litigation and arbitration cases over the past twelve months, with the total amount involved being about 315 million yuan.

Looking back at its decline, a key factor was the 2.3 billion yuan acquisition in 2015 of Huabo Renewable Resources (a lead recycling business), which once served as a profit pillar. However, as lithium batteries gradually replaced lead-acid batteries, this segment quickly turned from profit to loss, becoming a drag on performance from 2023 onwards.

The company attempted to divest this asset but failed due to changes in the market environment and obstacles in environmental impact assessments. It ultimately announced a complete shutdown of Huabo Renewable Resources in April 2026.

The eruption of these multiple financial crises ultimately led to the creditor's application for restructuring. If the restructuring is successful, it may resolve the debt crisis through measures like debt-to-equity swaps or introducing strategic investors. However, failure could lead to bankruptcy liquidation and delisting risks.

Requirements for Affected Investor Compensation Claims

The severe discrepancy in the earnings forecast and the major internal control deficiencies quickly drew regulatory attention. On July 7, 2026, the Shenzhen Stock Exchange issued disciplinary actions against ST Narada and related executives, determining that the company failed to disclose its earnings forecast truthfully and accurately as required, constituting a violation of information disclosure rules.

Lawyer Liu Peng indicated that investors who purchased shares between January 31, 2026, and April 24, 2026 (inclusive), and sold or continued to hold them after April 25, 2026, incurring losses, are still eligible to pursue claims.

For the nearly 100,000 shareholders holding the company's stock, actively participating in the claims process may be the only way to recoup some of their losses. Investors are reminded to make rational decisions and be mindful of investment risks.