China Evergrande’s Chairman Under Investigation for Suspected Crimes
A day after China Evergrande’s shares were suspended in Hong Kong, the troubled Chinese property firm revealed that its director and executive chairman, Hui Ka Yan, is under scrutiny for suspected crimes. Evergrande stated that Hui has been subject to mandatory measures in accordance with the law due to suspicion of illegal activities. As a result, the company’s shares will remain suspended until further notice.
Uncertainty Surrounds Evergrande’s Subsidiary, Hengda Real Estate Group
Evergrande also released a separate filing regarding the status of its subsidiary, Hengda Real Estate Group. The subsidiary recently failed to pay the principal and interest for a 4 billion yuan ($547 million) bond. Evergrande disclosed that Hengda has a significant number of pending litigation cases involving large amounts of money, totaling approximately 449.298 billion yuan ($61.61 billion). The unpaid debts from Hengda amount to approximately 278.53 billion yuan, with overdue commercial bills of about 206.777 billion yuan.
In August alone, Hengda faced 163 new enforcement cases with a total amount of approximately 9.13 billion yuan. Additionally, 68 cases resulted in the freezing of Hengda’s equity interest in subsidiaries and investee companies due to enforcement actions against it.
Evergrande’s Financial Troubles and Restructuring Challenges
Once China’s largest private sector developer by sales, Evergrande has been grappling with financial difficulties. The world’s most indebted real estate company faced a default in 2021 and suspended its shares in March last year, only resuming trading in August after a 17-month hiatus.
This week, Evergrande announced that it was unable to issue new notes under its debt restructuring plan due to an investigation into Hengda. It also postponed a debt restructuring meeting with creditors, citing lower-than-expected sales since the March announcement. Evergrande stated the need to reassess the proposed restructuring terms to align with its current situation and creditors’ demands.
In August, Evergrande, along with affiliate Tianji Holdings and its subsidiary Scenery Journey, filed for Chapter 15 bankruptcy protection in a U.S. court.