From the Wall Street Journal, January 5:
A key subsidiary of Zhongzhi had missed multiple debt payments
China’s Zhongzhi Enterprise Group has declared bankruptcy, following a calamitous year in which it sparked fears that the world’s second-largest economy was facing a “Lehman moment.”
....MUCH MOREA Beijing court accepted Zhongzhi’s bankruptcy and liquidation proposal on Friday, cementing one of China’s biggest corporate failures in recent history.
Zhongrong International Trust, a major subsidiary of the company, had around $108 billion of assets under management at the end of 2022. But it missed payments on a series of investment products last year, and in November the parent company told investors it had at least $31 billion more liabilities than assets.
The company was one of the biggest players in China’s roughly $3 trillion trust sector, a murky part of the financial system that offers investment products to wealthy individuals and businesses.
Trust companies promised juicy returns to their clients during China’s boom years, but some have struggled in the wake of a painful real-estate slump and the lasting economic impact of Covid-19.
Multiple Chinese companies said in stock exchange filings last year that they hadn’t received expected interest or principal payments on products managed by Zhongrong Trust, and individual investors made the same complaints on social media....
Previously:
November 26, 2023
"China wealth manager Zhongzhi flags insolvency, $64 billion in liabilities"
November 28, 2023
Shadow Bank? "Zhongzhi collapse could be bigger than Evergrande’s"
December 1
"More executives go missing in China — this time linked to troubled shadow bank Zhongzhi"
