Chinese police have detained some employees in the heavily indebted property developer Evergrande Group's wealth management unit - marking the latest trouble for the company after it has repeatedly failed to make payments for its investment products.
The Shenzhen police in a statement said that authorities have taken "criminal coercive measures against suspects" including a person surnamed Du and others in the financial wealth management company under Evergrande.
Du's identity is currently unclear and Evergrande has not answered to any questions over the detainment of its employment. However, some media reports listed Du Liang as head of the company's wealth management unit during investors' protests at Evergrande headquarters in Shenzhen two years ago.
What is happening with Evergrande?
Evergrande, the world's most heavily indebted real estate developer, is in the midst of a credit crisis that has dire repercussions for the growth of the second-largest economy across the globe. The company is undergoing the largest restructuring in the history of China, including offloading assets.
The firm missed a crucial deadline in 2021 by failing to make payments on around $1.2 billion of international loans, BBC reported. Last month, as debts crossed $300 billion, Evergrande filed for bankruptcy protection in the US.
The restructuring efforts are being made by Evergrande to avoid defaulting on $340 billion in debt. A series of such defaults since 2021 have left many half-finished apartment buildings and frustrated homebuyers. The real estate in crisis may slow China's economy and spill over globally.
Moreover, shares in the property developer have fallen almost 80% in their first day of trading in Hong Kong for a year and a half, BBC reported. Evergrande's shares had been suspended from trading since March last year.
China's national financial regulator on Friday announced that it has approved the takeover of the group's life insurance arm by a new state-owned entity.
China's real estate industry was heavily affected after new rules were announced to limit the amount of money firms could borrow in 2020. The current crisis, accompanied with the economic slump in China, has raised questions over the post-pandemic recovery and concerns over the impact it would have on the global economy.
(with agency inputs)
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