Chinese property giant Evergrande has had trading in its shares in Hong Kong halted after reports its chairman and founder Hui Ka Yan is under police surveillance sparked a new wave of selling.
Shares had only been trading for a month, having previously been suspended since 2021.
Earlier this week, executives of the property developer’s financial subsidiary were reportedly arrested in China.
No reason was given for the suspension of the shares but Evergrande has been struggling to put together a financial restructuring to help trade its way out of more than US$300 billion of debt.
Losses have totalled nearly US$80 billion over the past two years, while earlier this week Hengda Real Estate, Evergrande’s principal subsidiary, defaulted on a US$547 million interest payment.
Creditor meetings in Hong Kong were cancelled on Monday and Tuesday, while its US arm has already filed for creditor protection to insulate it against potential writs from North America-based bondholders.
Experts say Evergrande’s biggest creditors are the Chinese public, many of whom bought properties off-plan and are still waiting for them to be built.
Other Chinese property and housing finance companies have been dragged into the crisis.
Residential builder Country Garden is in a similarly parlous position to Evergrande.
Developments in second and third-tier regional cities in China are its speciality, with around US$14.9 billion of debt maturing this year alone or slightly more than its cash holdings.
Reports yesterday said it was working on a new restructuring plan with Houlihan Lokey (NYSE:HLI) and China International Capital after narrowly averting a default earlier this month.