For decades, Xilinmen was the gold standard of Chinese bedding, a furniture empire built on the back of the country's surging middle class. However, the 'first stock of mattresses' is now teetering on the brink of collapse as it struggles under the weight of 871 million RMB ($120 million) in unauthorized litigation. The crisis reveals a profound breakdown in internal controls, where the company’s actual controller, Chen Ayu, allegedly bypassed the board and shareholders to use the listed entity as a private piggy bank for high-interest debt.
The scale of the dysfunction is staggering. Of the total litigation amount, over 300 million RMB stems from loans taken out in the company’s name without the knowledge of the board or legal departments. Recent audits have characterized Xilinmen’s internal management as being in a state of 'total loss of control.' This administrative vacuum allowed the controlling shareholder to execute complex financial maneuvers, including reverse factoring and circular lending, to cover personal losses in outside ventures.
Xilinmen’s current predicament is a direct consequence of the aggressive and ultimately disastrous diversification strategy launched in 2015. Under Chen Ayu’s direction, the mattress manufacturer spent 720 million RMB to acquire a film production company at an 1,185% premium. When the entertainment industry cooled and performance targets were missed, the resulting goodwill impairments wiped out years of mattress profits. This failure forced Chen into a desperate cycle of high-stakes gambling in real estate and hospitality, further draining the company's liquidity.
As of 2026, the company’s stock has been tagged with the 'Special Treatment' (*ST) warning, signaling a high risk of delisting. With over 68% of the controller’s shares pledged and 100% of his direct holdings frozen by courts, the path to a bailout is narrow. Once a darling of the Shanghai Stock Exchange with a valuation that commanded respect, Xilinmen’s market cap has now evaporated by 80%, leaving retail investors to pay the price for a founder who forgot that a public company is not a personal fiefdom.