A top executive of Chinese property giant Evergrande Group’s (恆大集團) electric vehicle company has been detained by police in the latest sign of trouble for the world’s most heavily indebted property developer.
Evergrande New Energy Vehicle Group Ltd (恆大新能源汽車) announced the detention of Liu Yongzhuo (劉永灼), its vice chairman and an executive director, in a notice yesterday to the Hong Kong Stock Exchange.
Its shares plunged nearly 11 percent after they resumed trading later in the day.
Photo: Reuters
That followed news over the weekend that Zhongzhi Enterprise Group Co (中植企業), a major shadow bank in China that has lent billions in yuan to property developers, filed for bankruptcy liquidation after it was unable to pay its debts.
Zhongzhi, one of China’s largest private asset management companies, said in November last year that its debts of up to 460 billion yuan (US$64.74 billion) were more than twice its assets of 200 billion yuan.
Soon afterwards, Beijing police said they were investigating the suspected crimes of a Chinese wealth company owned by Zhongzhi.
Evergrande has been in crisis since it defaulted on its debt obligations two years ago.
It is in the midst of a restructuring that includes selling off assets to avoid defaulting on US$340 billion in debt.
The firm confirmed in September last year that its chairman, Hui Ka Yan (許家印), had been subjected to “mandatory measures in accordance with the law due to suspicion of illegal crimes.” His status is unclear.
Evergrande New Energy Vehicle’s shares tumbled nearly 20 percent last week after it said a deal to sell shares to Dubai-based NWTN Motors had lapsed.
The brief announcement of Liu’s detention on “suspicion of illegal crimes” made no mention of that or other details.
The company has delayed its plans for beginning manufacturing after running into difficulties in attracting enough funding.
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