Jan 09, 2015 06:39 PM

Three Creditors 'Ask Shenzhen Court to Freeze Assets of Developer Kaisa'

(Beijing and Hong Kong) – At least three financial institutions with loans to Shenzhen-based developer Kaisa Group Holdings have asked a court in the southern city to seize the assets of the troubled firm in the hopes of minimizing their losses, court documents and sources close to the situation say.

Documents published on January 8 by the Shenzhen Intermediate People's Court show that the local branch of China Citic Bank made the request two days earlier.

The Bank of China's Shenzhen branch and a trust investment subsidiary of China Resources filed similar requests with the court, said the sources, who added there may be others.

Kaisa told Caixin on January 8 that it had not received a notice from the court.

Kaisa has been mired in debt trouble since late November, when Shenzhen's urban planner froze all of its projects in the city, blocking sales and denying documents needed for further development. The regulator did not say why it did this.

The Hong Kong-listed developer's chairman, Kwok Ying Shing, resigned on December 10, triggering a default on a HK$ 400 million loan from HSBC Holdings. Two other senior executives have also left the firm.

Kwok admitted to authorities he had been involved in illegal operations with government officials on the mainland, a source with knowledge of the matter said. It is unclear what authorities received this admission.

The confession did not satisfy the authorities, who apparently wanted him to tell more, the source said, adding that freezing Kaisa's assets could be a tactic to achieve that goal.

Kaisa told Caixin it was unaware of any such confession.

Kwok and his relatives have Hong Kong permanent residency and have been living in the former British colony, a Kaisa employee said.

The developer said this month its partners in two development projects in Shenzhen demanded a refund of 1.2 billion yuan. Moody's Investors Service downgraded the company's crediting rating to Caa3 from B3 recently.

(Rewritten by Wang Yuqian)

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