Troubled Anxin Trust Faces $219 Million Debt Claim by State Fund

What’s New: Financially troubled Anxin Trust Co. Ltd. faces debt claims for 1.49 billion yuan ($219 million) from a state-backed trust-industry bailout fund, which is asking a court to order a sale of part of Anxin’s assets.

The China Trust Protection Fund Co. Ltd. demanded that a district court in Beijing order the sale of Anxin collateral to repay a 1.49 billion loan that was due Aug. 20, Shanghai-listed Anxin said Monday. The sale would involve a 32.98% stake in Beijing Datong Insurance Brokers Co. Ltd. pledged by Anxin to the fund.

Anxin said it is unable to estimate the impact of the suit on the company’s business performance.

The Background: The debt claim adds to the financial woes of Anxin, which has a 50 billion yuan ($7 billion) financial black hole mainly due to misappropriation of funds by its biggest shareholder.

Anxin is one of the highest-flying trust companies caught up in a regulatory crackdown on risks of freewheeling business growth and poor internal controls. The company is majority-owned by Shanghai Gorgeous Investment Development Co. Ltd., a company controlled by businessman Gao Tianguo. Gao was detained in May in a probe of illegal lending.

The company said in late August that it missed payments on a 5.65 billion yuan loan obtained from the China Trust Protection Fund to support its operations. It pledged its stakes in several financial institutions to the fund, but the value of the stakes failed to cover the debt as of June 30.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

Support quality journalism in China. Subscribe to Caixin Global starting at $0.99.