(Yicai Global) Dec. 7 -- Xifeng Liquor, which used to be one of China's four most famous liquor brands along with Kweichow Moutai Co. [SHA:600519], Shanxi Xinghuacun Fen Wine Factory Co. [SHA:600809], and Luzhou Laojiao CO. [SHE:000568], is planning to go public, but the firm has recently run into some trouble, finance.sina.com reported.

Xifeng Liquor submitted a prospectus to the China Securities Regulatory Commission (CSRC) in March 2016. Over a year later, on Aug. 2, 2017, the content of the prospectus was disclosed and updated on the website of the CSRC, but it was removed soon after. It is not on the CSRC's approval termination list, either.

By querying the prospectus, reporters identified some problems with Xifeng Liquor. They found out some bribery cases on the part of shareholders during share purchases. They also established some dealers hold shares in the company which seriously affects Xifeng Liquor's business independence. The company now has great difficulty in its IPO initiative, as the current Issuance Appraisal Committee is said to be the toughest committee in history. 

Of the 30 biggest shareholders of Xifeng Liquor, five are its dealers or de facto controllers of its dealers, the prospectus shows. Xifeng Liquor has identical or similar business with companies controlled by its shareholders, and this may constitute potential or actual horizontal competition. 

Judging by the past IPO requests rejected by the new Issuance Appraisal Committee, it is very likely to opine that the high percentage of related-party transactions in the case of Xifeng Liquor will affect the truthfulness of its profits, making it difficult for people to judge the fairness of its related-party transaction prices, said an insider of the stock brokerage industry. It will also cause questions as to whether the company's profits heavily rely on related parties.