Trust Firms Scramble as Court Ruling Threatens to Shake Up Industry

(Beijing) — Never before has New China Trust received so much attention from its peers in China.

The small trust company found itself in the spotlight recently when it lost a lawsuit while trying to recover a 225-million-yuan ($32.6 million) "equity investment" from a real estate developer that went bankrupt last year.

The court ruling sent many other trust firms' risk-control officers scrambling to examine their own contracts. They feared that since they had used the same accounting device as New China, their investments also might backfire.