A LOCAL interior decoration company suddenly suspended operation due to owing nearly 35 million yuan (US$5.48 million) to homeowners, contractors and material suppliers, the Shenzhen Evening News reported yesterday.

Headquartered in Hunan Province, N8house provides housing renovation and decoration services. On Sunday, the headquarters announced that the company had to suspend operation due to capital chain rupture.

It has been reported that subsidiaries in cities such as Shanghai, Wuhan, Nanjing and Nantong closed down following the announcement.

In mid-April, a man surnamed Zhang paid a total of 97,800 yuan to the company’s Luohu store to decorate his home in Bao’an District. On May 17, Zhang, who was on a business trip, got news from the headquarters that the company had suddenly sent a severance notice to its employees. He flew back to Shenzhen that evening and went to the Luohu store the next morning.

According to Zhang, the staffers at the company only asked him to register and wait for specific instructions from the company’s management department. Many contractors were also at the company to collect their debts.

“Not long ago, the company’s staffers repeatedly urged their customers to pay for the decoration services, and some even called in the early morning to urge us to pay the bills. I didn’t expect the company would close down so fast,” said a homeowner surnamed Huang. She paid 93,000 yuan to the company’s Nanshan store April 22, but her apartment still hasn’t been decorated.

According to rough statistics, the company owes nearly 18 million yuan to local homeowners, over 4 million yuan to contractors and at least 6 million yuan to material suppliers.

Last Saturday, reporters from the newspaper went to the Luohu store but found that the store had already been closed. The company’s legal representative, directors and all of the staffers were also out of reach.

“Because the company is in arrears with their payments, we are unable to pay wages to workers, so we have to stop working,” said a contractor surnamed Ji. The company owes him over 60,000 yuan.

On Sunday, the company’s headquarters issued a statement through its official WeChat account and attributed the shutdown to capital chain rupture, blind expansion, improper management and operation, as well as poor returns.

In the statement, the company promises that under the supervision of the government and representatives of creditors, the company will invite a third-party audit institution to inspect all the capital flows, plan to reorganize a new company and repay all of the debts within three years.

(Zhang Yu)