Evergrande Creditors Demand Further Explanation for Billions in Seized Cash

A group of offshore creditors to China Evergrande Group are demanding additional information about the seizure of nearly $2 billion by local banks that could explain how the troubled property developer pledged the funds without investors’ knowledge, the Wall Street Journal reported. Last Friday, Evergrande released the preliminary results of an investigation into the missing funds pledged as security for loans by an offshore subsidiary that manages Evergrande-built properties. Evergrande also announced last week that it ousted its longstanding chief executive officer, Xia Haijun, and its finance chief, Pan Darong, over their involvement in the arrangements, as well as four executives from Evergrande and its subsidiary. However, some creditors don’t believe that the company sufficiently explained how the funds were guaranteed to banks without any form of disclosure to investors, and they haven’t received any explanation beyond what the company has said publicly about the seized cash. This week, a group of Evergrande’s largest offshore creditors, which own secured debt backed by assets at the subsidiary, wrote to the company requesting additional information on which executives were directly responsible for the pledges, which banks enforced their claims on the assets and how the company specifically plans to compensate them for the lost funds, which represent most of the subsidiary’s cash. Read more. (Subscription required.)