The unit had been raising funds for its parent firm from individual and corporate investors as part of China’s “shadow banking” sector since 2015.Įarlier this month, the police in Shenzhen, where Evergrande is headquartered, detained some staff at the unit. The chairman’s detention might be partly related to its wealth management unit, Kam said. (Photo by STRINGER / AFP) / China OUT (Photo by STRINGER/AFP via Getty Images) AFP/Getty ImagesĮvergrande's bankruptcy may be just the beginning of China's real estate crisis Embattled Chinese property giant Evergrande Group filed for bankruptcy protection in the United States on August 17, 2023, court documents showed, a measure that protects its US assets while it efforts a restructuring deal. TOPSHOT - The Evergrande logo is seen on residential buildings in Nanjing, in China's eastern Jiangsu province on August 18, 2023. “ has certainly changed its posture because what was a debt restructuring story has now taken on the mantle, albeit not yet fact, of a criminal case,” said George Magnus, research associate at Oxford University’s China Centre and SOAS University of London. His detention casts further serious uncertainty on the future of the embattled property giant, which was hoping to finalize a massive government-supervised debt restructuring plan in the coming weeks to stave off collapse.Įvergrande, which still has $300 billion in liabilities and continues to bleed money, had already warned Sunday that the restructuring plan may be in trouble because of a regulatory probe into its main property development subsidiary in mainland China. Under the Chinese legal system, “mandatory” or “compulsory” measures can include detention and formal arrest. The company didn’t elaborate on Xu’s location or the nature of the alleged crimes. Xu Jiayin, also known as Hui Ka Yan in Cantonese, has been subject to “mandatory measures” on suspicion of crimes, Evergrande said Thursday in a filing to the Hong Kong stock exchange. But that plan now looks to be in peril, after police detained its chairman as well as staff at a financing subsidiary. After defaulting on its debt two years ago, Chinese real estate developer Evergrande was meant to be restructured and allowed to get back on its feet.
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