Rang Dong Holding JSC (Rang Dong Plastics; HCM City Stock Exchange - HOSE: RDP) has recently faced a series of unfavorable developments, from penalties for violations in information disclosure, requirements from a subsidiary on bankruptcy proceedings, and the simultaneous resignation of all five board of directors’ (BOD) members. RDP shares are currently suspended from trading.

Once aiming to become an internationally prominent multi-sector conglomerate with a focus on plastics manufacturing, this 65-year-old Vietnamese company now stands on the brink of collapse.

Rang Dong Plastics traces its origins to the French Far East Rubber Enterprises Union, established in 1960. After being renamed Ufiplastic, the company pioneered the importation of advanced equipment from Japan and Taiwan (China) to produce innovative plastic products.

After 1975, it was renamed Rang Dong Plastics Factory and began expanding its network of factories to Hanoi, Nghe An, and Khanh Hoa. The years from 2005 to 2018 were the most robust growth phase of Rang Dong, when it not only expanded the network of factories, but also established many subsidiaries.

In the domestic plastics industry, Rang Dong Plastics was a leader, with particular advantages in PVC thermoplastics and roofing sheets. At times, products such as PVC thin films and roofing sheets captured over 50 percent of the domestic market share.

Rang Dong Plastics also made synthetic leather products for yacht interior decoration for export. During its prosperous years, the segment witnessed an average growth rate of 20 percent per annum.

Before 2023, Rang Dong Plastics maintained a solid financial position, with annual after-tax profits reaching tens of billions of dong. For instance, in 2021, RDP recorded a net profit of VND38 billion, followed by VND13 billion in 2022.

The man who led Rang Dong to success and became the leader in plastics manufacturing was chair of the board of directors Ho Duc Lam. He is also well known as the younger brother of former Deputy Minister of Industry and Trade Ho Thi Kim Thoa.

Thoa has been prosecuted and wanted since July 2020 for violating regulations on management and use of state assets, causing losses and waste.

As of June 2024, Ho Duc Lam held nearly 7.8 million RDP shares, or 15.87 percent of shares. His son, Ho Duc Dung, who recently resigned from the post as a board member, holds 65,269 RDP shares, or 0.13 percent.

Decline in fortune

Rang Dong Plastics’ situation began to darken in 2023 when the company lost a lawsuit against Japan’s Sojitz Pla-net Corporation and was ordered to repay VND157 billion along with related costs.

The issue originated in 2017 when Sojitz Pla-net signed a contract to purchase 5 million shares of Rang Dong Long An JSC, owned by Rang Dong Plastics, for VND174.4 billion. After the share transfer, Rang Dong Plastics breached certain obligations, prompting the Japanese partner to terminate the contract and demand a refund of 90 percent of the contract value, equivalent to VND157 billion. When Rang Dong Plastics failed to repay, Sojitz Pla-net initiated legal action.

The Singapore International Arbitration Centre subsequently ruled in favor of Sojitz Pla-net, ordering Rang Dong Plastics to repay VND157 billion plus 10 percent annual interest, totaling VND174 billion.

The lawsuit’s aftermath immediately impacted Rang Dong Plastics’ finances. The 2023 consolidated financial statement revealed a loss of nearly VND147 billion. Additionally, the company owed banks a total of VND1,331 billion.

Most recently, Rang Dong Plastics reported its financial performance for the first six months of 2024, showing a loss of over VND64 billion. As of June 2024, accumulated had losses reached VND266 billion.

Earlier this year, the HCM City People’s Court announced it had accepted a request to initiate bankruptcy proceedings against Rang Dong Plastics, filed by Rang Dong Films JSC (Rang Dong Films). As of June 2024, Rang Dong Films, one of five subsidiaries of Rang Dong Plastics, was 97.7 percent owned by the parent company.

The court required Rang Dong Plastics to explain the reasons for its insolvency, and provide an inventory of assets, bank account balances, a list of creditors, and details of entities and individuals indebted to the company.

Most recently, explaining the delay in releasing the 2024 governance report and the fourth-quarter 2024 financial statement, a representative of Rang Dong Plastics stated that since mid-2024 the company has encountered numerous difficulties.

Rang Dong Plastics and its subsidiaries have ceased operations, with the majority of staff having resigned, resulting in the inability to provide data for compiling and submitting financial reports on time.

Anh Phuong