Chinese authorities have reportedly arrested Hui Ka Yan, the chairman of Evergrande. They are currently holding him at a designated location and reportedly monitoring his activities. These restrictions include limitations on his communication with others and his inability to leave a designated location without permission. Legally, he has been compelled to surrender his identification documents and other personal belongings to the police. At his peak in 2017, Hui was among the wealthiest individuals in Asia, boasting a net worth of $42 billion.
Furthermore, Hui’s net worth has decreased by $1.8 billion as a result of the recent crisis.
Simultaneously, Evergrande, the company Hui chairs, is burdened with liabilities exceeding $327 billion.
Towards the end of the previous week, Evergrande disclosed that it had engaged in discussions with its creditors and was reevaluating its restructuring strategy for its offshore debt. The developer noted that it was not meeting certain regulatory requirements to issue new bonds and revealed that its Chinese arm had failed to repay a bond on the mainland.
Similarly, A Manhattan court received a bankruptcy filing from an Evergrande affiliate in a similar move, indicating that the company’s problems are not limited to China. This development raises concerns that the property sector’s difficulties could spread to other sectors, such as finance and construction.
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The Central Bank of China has previously criticized Evergrande for poor management and reckless expansion. Additionally, the government has urged Hui to use his assets to help compensate investors.
As the Evergrande crisis has unfolded, it has caused concern in the housing market sector, which has been impacted by the fallout.
On August 17, 2022, Evergrande filed for Chapter 15 bankruptcy protection in the United States, and this move temporarily shielded the company from its creditors. While Evergrande actively initiated bankruptcy protection proceedings in the US, it is also actively pursuing restructuring in other jurisdictions, including Hong Kong, the Cayman Islands, and the British Virgin Islands, where ongoing negotiations and creditor votes are expected in early September.
Evergrande’s bankruptcy filing sent shockwaves through the cryptocurrency industry, resulting in a substantial drop in the prices of major digital assets and raising concerns about the stability of Tether, a prominent stablecoin.