Tianwo Technology's subsidiary involved in a contract dispute over buying and selling, sued for paying 23.75M yuan in breach of contract penalties and compensation

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Suzhou Tianwo Technology (Rights Protection) Co., Ltd. (Stock code: 002564, Stock abbreviation: Tianwo Technology) recently issued a major litigation announcement. The company’s subsidiary Zhanghuaji (Suzhou) Reinstallation Co., Ltd. (hereinafter referred to as “Zhanghuaji”) was sued by Ningxia Changyi Clean Energy Co., Ltd. (hereinafter referred to as “Ningxia Changyi”) over a sales contract dispute, with an involved amount of 23.75M yuan. Currently, the Yinchuan Intermediate People’s Court of Ningxia Hui Autonomous Region has accepted this case, and Zhanghuaji, as the defendant, has received the “Notice of Defense.”

The announcement shows that this lawsuit stems from two equipment sales contracts previously signed by both parties. In June and August 2019, Ningxia Changyi and Zhanghuaji successively signed the “Pressure Vessel Equipment Sale Contract for the 400k Tons/Year Ethylene Glycol Project Gasification Unit” (total contract price of 72 million yuan) and the “DMO Reactor and Ethylene Glycol Synthesis Tower Sale Contract for the 400k Tons/Year Ethylene Glycol Project” (total contract price of 58.5 million yuan).

It is noteworthy that the two parties had previously had two lawsuits over payment issues. Ningxia Changyi twice delayed payment for the equipment, and Zhanghuaji filed lawsuits in October 2021 and September 2022, respectively, with claimed amounts of 20.25 million yuan and 39.15 million yuan. Both cases were settled through reconciliation. As of now, Ningxia Changyi still owes Zhanghuaji principal equipment payments of 38.6865 million yuan and payable interest.

In this lawsuit, Ningxia Changyi claims that the methanol synthesis tower under the contract “Pressure Vessel Equipment Sale Contract for the 400k Tons/Year Ethylene Glycol Project Gasification Unit” supplied by Zhanghuaji did not meet the contractual requirements. Based on this, three claims are made: first, to order Zhanghuaji to pay a penalty of 21.6 million yuan; second, to compensate for additional losses of 400k yuan; third, to bear the litigation costs of this case. The total of these two costs amounts to 400k yuan.

Tianwo Technology stated that the impact of this case on the company’s current or future profits cannot be determined at this time. The company will perform relevant accounting treatments in accordance with accounting standards and actual circumstances, and will fulfill information disclosure obligations in a timely manner.

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