The chair of China’s Evergrande Group has reportedly been put under police surveillance as another missed bond payment casts further doubt over the future of the world’s most indebted property developer.
Hui Ka Yan, who founded Evergrande in 1996, was taken away earlier this month and is being monitored at a designated location, according to Bloomberg.
It is not clear why Hui might have been placed under residential surveillance, which falls short of a formal detention or police arrest and does not mean he will be charged with a crime.
Earlier this week, Hengda Real Estate, Evergrande’s primary unit in mainland China, missed principal and interest payments on a 4bn yuan (£450m) bond.
Evergrande said it was unable to sell new debt, a key part of its proposed restructuring plan, because the unit is being investigated by Chinese authorities.
The company, once China’s top property developer, was found in 2021 to be struggling with more than $300bn in liabilities, as government officials tightened scrutiny on the real estate sector. Its liquidity crisis soon made it a symbol of the country’s property sector woes.
Earlier this year it laid out a plan to compensate investors with notes linked to its listed Hong Kong subsidiaries, which include an electric vehicle company and a property management business.
Evergrande, which has cancelled meetings with creditors scheduled for this week, cannot now issue new notes against those businesses.
The company faces a court hearing in Hong Kong on a winding up petition that could force it into liquidation. The hearing, which was scheduled for July, is now due to take place on 30 October.
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In August, Evergrande filed for chapter 15 bankruptcy protection in New York to protect its US assets as the company hopes to restructure its finances.
