HomeBusinessEvergrande Chairman Suspected of Illegal Activities, Confirmed by Company

Evergrande Chairman Suspected of Illegal Activities, Confirmed by Company

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Evergrande, China’s debt-ridden real estate giant, has suspended trading after its chairman, Hui Ka Yan, was detained by Chinese authorities on suspicion of illegal activities. The company confirmed that it had received notification from relevant authorities and would halt trading until further notice. This comes as the latest blow to Evergrande, which has been at the center of China’s real estate crisis. The company has been grappling with massive debt and has already defaulted on its obligations. It now faces the possibility of liquidation if it fails to present a viable restructuring plan by the end of October.

The billionaire developer’s detention follows a series of setbacks for Evergrande. The company recently canceled key meetings with creditors, citing lower-than-expected sales. It also disclosed that it was unable to issue new debt due to a regulator probe into its main subsidiary. In addition, law enforcement detained Evergrande’s former CEO and CFO, along with other executives, in connection with an investigation into possible fund misuse. The company further missed a bond payment worth $547 million, increasing concerns about its financial stability. With a winding-up petition scheduled for October 30, Evergrande faces mounting pressure to find a solution before it faces liquidation.

The situation has prompted some offshore creditors to consider supporting liquidation if Evergrande fails to present a viable restructuring plan by the end of October. The company’s shares have plummeted since resuming trading in August, falling over 80% during this period. Evergrande’s financial struggles have reverberated throughout China’s real estate sector, impacting other developers like Country Garden. The liquidity crisis triggered by new regulations aimed at reducing developers’ risk has led to a wave of defaults. With over $81 billion in losses incurred in 2021 and 2022, Evergrande’s future remains uncertain as it grapples with its mounting debt and the potential for liquidation in the coming weeks.

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