Chinese court accepts wealth manager Zhongzhi's bankruptcy application
BEIJING (Reuters) — A court in China's capital Beijing on Friday accepted Zhongzhi Enterprise Group's application for bankruptcy liquidation, as the wealth manager grapples with a deepening property market downturn.
Zhongzhi applied for bankruptcy on the grounds it could not pay its due debts and its assets were insufficient to pay all its debts, the court said in a statement.
The company, which has sizable exposure to China's real estate sector, apologised to its investors in a letter in November that said it was heavily insolvent with up to $64 billion in liabilities. That compares to Zhongzhi's estimated total assets of about 200 billion yuan ($27.95 billion).
Beijing-based Zhongzhi did not immediately respond to a Reuters request for comment.
Signs of Zhongzhi's problems emerged in July when Zhongrong International Trust Co, a leading trust company controlled by Zhongzhi, missed payments on dozens of investment products.
In August, Zhongzhi told investors it faced a liquidity crisis and would conduct a debt restructuring. The management said the plan is for «self-rescue» through restructuring, with a focus on debt collection and asset liquidation, but bankruptcy is also an option.
Zhongzhi's problems have raised concern the country's property debt crisis is affecting the broader financial sector.
A shortage of liquidity has impacted China's highly-indebted property sector since 2020. Defaults by developers since late 2021 have impeded economic growth and rattled global markets.
($1 = 7.1562 Chinese yuan renminbi)
Read more on investing.com
