China Evergrande Group, the troubled Chinese property firm, has revealed that its director and executive chairman, Hui Ka Yan, is under scrutiny over suspected crimes. Hui has been subjected to mandatory measures in accordance with the law due to suspicion of illegal activities. As a result of this development, Evergrande’s shares will remain suspended until further notice. This comes after a Bloomberg report stated that Hui had been placed under police control and is being monitored at a designated location.
In a separate filing, Evergrande disclosed 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 revealed that Hengda currently has 1,946 pending litigation cases, each involving more than 30 million yuan. The total amount involved in these cases is approximately 449.298 billion yuan ($61.61 billion). Additionally, Hengda has approximately 278.53 billion yuan in unpaid debts and 206.777 billion yuan in overdue commercial bills.
Evergrande, once China’s largest private sector developer by sales, defaulted in 2021 and its shares were suspended in March of last year. The company only resumed trading in late August after a 17-month hiatus. Recently, Evergrande stated that it was unable to issue new notes under its debt restructuring plan due to an investigation into Hengda. The company also postponed a debt restructuring meeting with creditors, citing lower-than-expected sales. In August, Evergrande and its affiliates filed for Chapter 15 bankruptcy protection in the U.S.
In summary, Evergrande’s director and executive chairman, Hui Ka Yan, is facing scrutiny over suspected crimes, leading to the suspension of the company’s shares. The subsidiary, Hengda Real Estate Group, has a significant number of pending litigation cases and unpaid debts. Evergrande has faced financial difficulties, including default and suspension of its shares, as well as challenges in issuing new notes and restructuring its debt.