248 companies including Zhongzhi Group plan to conduct substantial merger, bankruptcy and liquidation : China

The Beijing No. 1 Intermediate People's Court announced on Friday (28th) that the administrator of China's financial giant Zhongzhi Enterprise Group submitted an application to the court stating that Zhongzhi-related companies have complex affiliations, widely distributed assets, and huge debts. Therefore, it applied for a substantive merger and bankruptcy liquidation of 248 companies including Zhongzhi Enterprise Group.

The senior executives of Zhongzhi Group, which has a debt of more than 400 billion yuan, have been taken compulsory measures

Zhongzhi Enterprise Group filed for bankruptcy in January this year. The Beijing No. 1 Intermediate People's Court ruled to accept the case on January 5 and appointed Beijing Dacheng Law Firm as the administrator on January 26.

The Wall Street Journal reported at the time that Zhongrong International Trust, a major subsidiary of Zhongzhi Group, managed assets of approximately US$108 billion (approximately RMB 784.9 billion) by the end of 2022. However, the company failed to make payments on a series of investment products on time last year, and Zhongzhi Group told investors in November last year that its liabilities exceeded its assets by at least US$31 billion.

The report also mentioned that Zhongzhi Group is one of the largest players in China's approximately $3 trillion trust business, an opaque part of the financial system that provides investment products to wealthy individuals and companies.

The Beijing No. 1 Intermediate People's Court pointed out on Friday that after investigation by the administrator, Zhongzhi Enterprise Group and 247 other companies including Zhonghai Shengfeng (Beijing) were highly related and their legal personality was highly confused. "The cost of distinguishing the property of 248 companies including Zhongzhi Enterprise Group Co., Ltd. is too high, and separate bankruptcy liquidation will seriously damage the fair repayment interests of all creditors."

The Beijing No. 1 Intermediate People's Court stated that if relevant interested parties have any objections to the application for substantial merger and bankruptcy liquidation filed by Zhongzhi Enterprise, they should submit such objections before July 5 this year. After the expiration of the objection period, it will examine whether the registrant has any interest in the entity to be substantially merged, and will hear the opinions of relevant parties through hearings and other means.