One of the creditors of Chinese automobile producer Youngman Auto, which had sparked widespread skepticism earlier over a water-hydrogen engine, has had its application to put the auto maker into bankruptcy procedures denied by a court in East China's Zhejiang Province, because the court deemed the firm still has operating value.

Zhejiang-based state-owned Haining Asset Management Co, applied to Jinhua Intermediate People's Court for bankruptcy liquidation of Youngman Auto on the grounds that the company failed to liquidate its outstanding debts in due time and clearly lacked solvency, the Beijing Youth Daily reported on Saturday.

The cooperation between Youngman and Haining Asset Management Co dates back to 2005 when the auto producer set up a project to make auto parts in Haining, East China's Zhejiang Province. The project later expanded to a whole automobile industry chain including vehicle manufacturing, new energy research and development and parts production, said the report.

Launched in 2010, the project suffered intermittent delays and ultimately ended in 2013.

According to corporation information research site tianyancha.com, Youngman was listed as a dishonest enterprise by Shanghai Arbitration Commission in March because it refused to pay its debts even though it is solvent.

The commission also demanded that Youngman immediately repay its 50 million yuan ($6.9 million) debt and related interests to Haining Asset Management Co.

There was widespread skepticism in May when Youngman claimed it had invented a water-powered engine, while the dozens of written judgments of dishonesty also attracted public attention.

A number of company executives' equity stakes have been frozen by the court, media reports said.

Youngman Auto had assets of 1.583 billion yuan and liabilities of 735 million yuan at the end of 2018. The company claimed it does not constitute the bankruptcy conditions stipulated by law since its assets exceed its liabilities, said the report.