Huachen Automotive Group Holdings has entered bankruptcy restructuring.

The Shenyang Municipal Intermediate People's Court in northeast China's Liaoning Province, where the company is based, on Friday accepted the restructuring application filed by a creditor.

The court said the auto firm had insufficient assets to pay off its debts, but it was worthwhile and possible to rescue the company through restructuring.

The state-owned conglomerate is the parent of Brilliance China Automotive Holdings, which teamed up with German carmaker BMW to form a joint venture called BMW Brilliance Automotive in 2003.

The company has been struggling with debts and loss-making of its self-owned brands, a situation exacerbated by the COVID-19 outbreak. Last month, it triggered concern after defaulting on a 1-billion-yuan (about 152 million U.S. dollars) bond.

Sources with Huachen said the restructuring only involves its own brands, and its joint ventures with BMW and Renault will not be affected.

On Friday, China's top securities watchdog said it has taken measures against Huachen Automotive Group Holdings and relevant intermediaries.

A special inspection into the group's bond default has been launched, which has caught market attention, the China Securities Regulatory Commission said in a statement on its website.

The commission issued a warning letter to the group on Friday, and decided to file an investigation into its illegal information disclosure and suspected violation of laws and regulations.

It simultaneously conducted checks on intermediary agencies involved in the group's relevant bonds, with relevant illegal acts investigated and punished, according to the statement.

Since the launch of the joint venture in 2003, BMW has invested over 52 billion yuan in Shenyang and completed the building of two automotive factories, one powertrain plant, and one research and development center.

China has become the world's largest sales market for BMW, which sold more than 720,000 cars in 2019, and the auto company has announced it would enhance investment to further tap the Chinese market this year. Enditem