Crisis-Hit Chinese Property Behemoth Evergrande Faces A Deadline When Its Executives Resign

Following the departure of two executives, embattled Chinese real estate company Evergrande is set to submit a preliminary reorganisation plan this week. The company’s CEO and CFO have resigned, according to the company, after an internal investigation revealed that they misappropriated approximately $2 billion in loans.

Evergrande has more than $300 billion in liabilities and went bankrupt late last year. The situation has alarmed traders who are concerned about the spread of the crisis in China’s property market.

Evergrande announced on Friday that its chief executive Xia Haijun and chief financial officer Pan Darong were involved in transferring 13.4 billion yuan ($2 billion) in loans secured by its property services unit to the larger group.

According to a filing to the Hong Kong Stock Exchange, Xia and Pan resigned due to their “involvement in the preparation of the promises.”

According to a subsequent statement, the cash “were transferred and redirected back to the group via third parties and were utilised for the organisation’s general operations.”

Evergrande also stated that it was in discussions with its property services unit about a repayment arrangement. In October, a $2.6 billion proposal to sell a majority stake in the unit to a rival developer fell through.

Evergrande, the world’s most indebted property developer, has been struggling to make payments on its more than $300 billion in liabilities and had missed a critical repayment date on its offshore loan in December.

Its Hong Kong shares have dropped by more than 75 per cent in the last year and have been barred from trade for months. The corporation is expected to propose a preliminary debt restructuring plan by next week.

Last year, China’s property crisis is projected to have devalued the industry by more than a trillion dollars. Because of the significant possible consequences of Evergrande’s collapse, several analysts believe Beijing may intervene.

Since the Evergrande debacle, “an increasing number of developers have failed to repay their debt and complete their construction efforts,” according to Nomura, a Japanese financial behemoth.

On Monday, it was also reported that China was intending to launch a real estate fund to support a number of property developers, including Evergrande.

According to sources, the fund might be worth up to 300 billion yuan.

According to official figures, home sales in China have decreased for 11 straight months. This is the longest downturn since China established a private real estate market in the late 1990s. Because of cash flow difficulties, several Chinese developers have delayed the construction of homes that have already been sold.

Some property buyers have vowed to cease paying their mortgages until the work is resumed in recent weeks.

According to the Shanghai-based E-house, more than 200 projects by at least 80 developers have been impacted. Research and Development in China

According to official media, the China Banking and Insurance Regulatory Commission has vowed to assist local governments in “guaranteeing the delivery of dwellings.”

(Adapted from


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