A Beijing court has ordered the liquidation of Zhongzhi Enterprise Group and more than 300 related entities, in a major step towards resolving one of China’s biggest shadow banking collapses and managing systemic financial risks.
Creditors have until June 10 to file their claims with the administrator, Beijing Dacheng Law Offices, according to a court statement dated on Friday evening. The court ruled that Zhongzhi and 316 affiliated firms would undergo a consolidated bankruptcy process, which means the assets and liabilities of the companies will be treated as a single pool in the proceedings. Zhongzhi, which had sizeable exposure to China’s property sector, filed for bankruptcy in January 2024 as it grappled with a deepening downturn in the real estate market.
The collapse of Zhongzhi, once a major player in China’s shadow banking sector, has added to concerns the country’s property debt crisis is spilling over into the broader financial sector.
Shadow banking-linked wealth managers in China typically operate outside many of the rules governing commercial banks and mainly channel the proceeds of wealth products sold to retail investors to real estate developers and other sectors. In December, a court in Beijing sentenced a former chairman of Zhongzhi Enterprise Group and several others to prison terms ranging from four-and-a-half to 14 years for illegally taking public deposits, state media reported.
