Crunch fitness mcknight2/18/2024 The Beijing-based company is considered part of China’s $3 trillion “shadow banking” industry, a sector that forms an important source of finance in the country. The group did not respond to a request for comment on Monday. Zhongzhi apologized for its financial woes, and said that since the death of its founder in 2021, and the subsequent resignations of senior executives, it had struggled with “ineffective” internal management. “Liquidity is exhausted, and asset impairment is serious,” Zhongzhi said in the letter, which was cited by Chinese state-owned news outlets. “Preliminary due diligence shows that the group is severely insolvent and has significant ongoing operating risks,” It pegged its total liabilities at up to 460 billion yuan ($65 billion), against assets of 200 billion yuan. On Wednesday, it told its investors in a letter that it has a “huge debt” and cannot pay all its bills. Zhongzhi controls nearly a dozen asset and wealth management firms. The office building of Zhongrong International Trust, a trust company partially owned by Zhongzhi Enterprise Group, in Beijing, China August 22, 2023. Under China’s Criminal Procedural Law, “criminal mandatory measures” can mean anything from bail pending trial or house arrest to detention or arrest. “Investors are requested to actively cooperate with the police in investigating and collecting evidence,” the police said, without elaborating on the crimes or the measures. The founder of the group, Xie Zhikun, died of a heart attack in December 2021, but his nephews hold key posts in the group, according to Chinese state media. The announcement comes just days after the company told investors that it is “ severely insolvent.”Īccording to a statement posted on Saturday, police suspect Zhongzhi of “illegal crimes” and have enforced “mandatory criminal measures” against a number of suspects, including one surnamed Xie. The troubles besetting one of China’s biggest privately-owned financial conglomerates have deepened with Zhongzhi now at the centre of a criminal investigation.īeijing police have begun a probe into the wealth management unit of Zhongzhi Enterprise Group, the authorities said over the weekend.
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