(Yicai) July 25 -- Baoneng Motor Group, the carmaking arm of distressed Chinese property and financial services conglomerate Baoneng Investment Group, has lost the land use rights of a plot in Shenzhen because of a two-year delay in the construction of the above-ground buildings.

The Planning and Natural Resources Bureau of Shenzhen recovered the land use rights of a plot owned by Baoneng Motor in Longhua district, according to relevant provisions of the Regulations of Shenzhen Special Economic Zone on Assignment of Land Use Rights. The plot was then pledged to Guangzhou Science City.

Yicai learned from sources that 12 buildings and above-ground auxiliary facilities were also confiscated.

After losing the land use rights, Baoneng Motor may terminate its project in Shenzhen, further affecting the company’s financial situation and reputation, according to industry analysts.

This was not the first time Baoneng Motor had troubles with land plots and land use rights. In July last year, the government of Xi’an recovered a plot owned by Baoneng Motor because the firm failed to submit the real estate certificate in time.

Moreover, Baoneng Motor lost three plots in Guangzhou it purchased between 2017 and 2019 for a total of CNY870 million (USD119.8 million) in October last year because it hadn't applied for the land use rights after the deadline.

As of mid-July, Baoneng Investment had been asked by courts to repay a total of CNY52.9 billion (USD7.3 billion) worth of debts to creditors in more than 80 cases.

Baoneng Investment forayed into the auto sector in 2017 when it founded Baoneng Motor. It acquired a total 63 percent stake in Chery Automobile’s Qoros Automotive, a 49 percent stake in BAIC Group-backed Foton Motor, and a 100 percent stake in Dongfeng Nissan’s Zhengzhou Nissan, and invested in Guangzhou Sitech Dev.

With all these expenses, Baoneng Investment could not manage to achieve stable cash flow. In fact, many rumors have been circulating about the company skipping salary payments. In May, hundreds of properties owned by several Baoneng subsidiaries were seized and auctioned.

Editor: Futura Costaglione