Tensions rise between Ricons and Coteccons amid debt row

July 31, 2023 | 18:35
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Rising tensions between two major Vietnamese construction companies, Ricons Investment Construction JSC and Coteccons Construction JSC, have become public as Ricons has requested bankruptcy proceedings against Coteccons over a longstanding debt dispute.
Tensions rise between Ricons and Coteccons amid debt row

Representatives from Coteccons believe the timing of the litigation is not a coincidence as it coincides with both businesses participating in a competitive tender process for the Long Thanh International Airport project, a high-stakes venture valued at VND35 trillion ($1.47 billion).

Coteccons, as part of the Hoa Lu consortium, are in the middle of tendering a bid for the airport project, a key part of the national infrastructure development plan.

"This action is not arbitrary and its occurrence at this critical juncture cannot be overlooked," a spokesperson for Coteccons said.

Coteccons also revealed the company's financial standing, citing total assets of approximately VND20 trillion ($844 million), equity around VND8.2 trillion ($346 million), and liquid cash reserves close to VND4 trillion ($169 million).

These figures suggest a stable financial position, underpinning the company's ability to weather ongoing challenges.

Coteccons interprets Ricons' appeal to the court as a contractual dispute rather than a bankruptcy issue, and the company has confirmed that a series of transactions involving both receivables and payables have transpired between the two entities.

The roots of the disagreement, according to Coteccons, date back to before 2019, when both companies operated within an interconnected network of seven member companies that included Coteccons, Unicons, Ricons, Newtecons, BM Windows, SoL E&C, and Boho.

Ricons, serving as the primary contractor on several projects, engaged Coteccons in roles such as subcontracting for the Regina Hung Yen project, project design for DongA Bank, equipment leasing, and utilities services.

Coteccons contends that outstanding debts have not been fully reconciled due to complications surrounding the valuation of the debts and the necessity of fulfilling legal requirements.

Similarly, projects where Coteccons assumed the role of the primary contractor also gave rise to debts for Ricons, acting as the subcontractor. These debts, originating from projects such as Newtaco, Regina phases 4-5-6, the VinFast factory, and the Simco project, remain unsettled.

"Coteccons is prepared to engage in dialogue to resolve the commercial dispute between us and Ricons. It is a testament to our commitment to transparency and the protection of our shareholders' and investors' interests," said the spokesperson from Coteccons.

Despite the ongoing dispute, Coteccons expressed its commitment to business ethics and its willingness to cooperate with Ricons. The firm also pledged to provide all necessary documentation to aid the court in resolving the matter.

In response to the claims, Ricons voiced concerns about the proliferation of misleading information on social media, arguing that these misrepresentations have been detrimental to the firm's reputation and business operations.

Ricons further elaborated that the decision to request a bankruptcy procedure against Coteccons was a direct result of persistent non-payment of overdue debts that Coteccons had acknowledged. Ricons claims to have made repeated attempts to reach a resolution with Coteccons, even informing the company of its intention to initiate bankruptcy proceedings to prevent any potential negative ramifications.

Ricons clarified that its actions, which include a debt settlement request followed by a bankruptcy filing, came after an extended period of legal procedures. The court accepted Ricons' request on July 4.

"Our legal action is driven solely by the aim of recovering this long-overdue debt," a Ricons' representative said. "As matters stand, the dispute is under judicial review," the representative added. "All arguments and conclusions relating to the issues between the two companies will be presented and resolved in court."

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