Six executives of faltering Chinese real estate developer Evergrande had cashed out investment products from the company when they were not allowed to, Evergrande announced.
The company is demanding that the six pay back the money. In addition, the real estate developer wants to impose the six “severe fines”.
The six senior managers had invested money in their own Evergrande investment product. The company maintains rules for when they can be paid out. However, the six were paid before that date. Therefore, those early payouts are likely related to Evergrande’s financial position.
Evergrande has been in serious financial trouble for some time now. The company has more than 200 billion euros in debt, and earlier this week, it became clear that creditors should not count on interest payments this month. It has also been unable to get rid of assets for some time, and several company projects have come to a standstill so that Evergrande cannot earn from it either.
Since the beginning of this year, the stock market value of Evergrande, which has more than 800 projects in progress in 220 cities, has plummeted by three quarters. Investors fear bankruptcy, which could have a knock-on effect on the Chinese real estate market. Like Evergrande, many companies fund new projects with customers’ down payments. This leaves little financial margin if things go wrong.
