China Evergrande’s woes worsen as its chairman is accused of ‘illegal activities.’
A day after its shares were banned in Hong Kong, China Evergrande confirmed that its director and executive chairman are being investigated for possible crimes.
Hui Ka Yan “has been subjected to mandatory measures in accordance with the law due to suspicion of illegal crimes,” Evergrande said late Thursday in a statement to the Hong Kong Stock Exchange.
As a result, the company’s stock will be halted until further notice.
This comes after a Bloomberg story on Wednesday, which stated that Hui had been “placed under police control.”
According to Bloomberg, Hui was detained by Chinese authorities earlier this month and is being observed at a specified location, citing people familiar with the situation.
Evergrande issued a supplementary filing late Thursday about the status of its subsidiary Hengda Real Estate Group, which recently failed to pay the principal and interest on a 4 billion yuan ($547 million) bond that was due on September 25.
According to Evergrande, as of the end of August, Hengda had 1,946 ongoing lawsuit cases, each involving more than 30 million yuan, for a total of nearly 449.298 billion yuan ($61.61 billion).
Hengda’s total outstanding obligations totaled around 278.53 billion yuan, with delayed commercial invoices totaling approximately 206.777 billion yuan.
Evergrande stated in the same filing that there were 163 new enforcement cases against Hengda Real Estate in August, totaling about 9.13 billion yuan, though it did not comment on the nature of the charges.
Hengda also had 68 additional cases in which its stock stake in subsidiaries and investee firms was frozen as a consequence of enforcement procedures.
Evergrande was once China’s largest private-sector developer in terms of sales.
The world’s most indebted real estate corporation declared bankruptcy in 2021, and its stock was halted in March of last year. After a 17-month break, they only recently started trading in late August.
Evergrande recently announced that it will be unable to issue additional notes under its debt restructuring plan owing to an inquiry into Hengda.
It also postponed a debt restructuring conference with creditors scheduled for Monday, citing “the Group’s sales have not been as expected by the company” since its March debt restructuring announcement.
Therefore, Evergrande “considers it necessary to re-assess the terms of the proposed restructuring to meet the company’s objective situation and the demand of the creditors.”
Evergrande, together with associate Tianji Holdings and its subsidiary Scenery Journey, filed for Chapter 15 bankruptcy in a U.S. court in August.