Shadow Banking Giant Zhongzhi and 247 Affiliated Firms Face Consolidated Liquidation

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A bankruptcy administrator on Friday applied to a Beijing court for a consolidated liquidation for Zhongzhi and 247 affiliated firms. Photo: VCG

Embattled Chinese financial conglomerate Zhongzhi Enterprise Group Co. Ltd. and 247 affiliated firms face a consolidated liquidation, latest court proceedings show, underscoring the sweeping impact of the shadow bank’s dramatic collapse.

The request for a consolidated bankruptcy liquidation was filed to the Beijing First Intermediate People’s Court on Friday by Zhongzhi’s bankruptcy administrator Beijing Dacheng Law Offices, citing the companies’ “complex affiliations, widely distributed assets and significant liabilities.”

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Zhongzhi Enterprise Group Co. Ltd. and its 247 affiliated firms are facing a consolidated liquidation due to overlapping legal identities, widely distributed assets, and significant liabilities.
Beijing court accepted Zhongzhi's bankruptcy liquidation in January, citing a financial shortfall of 260 billion yuan ($36.5 billion); police have taken criminal measures against key suspects involved in illegal activities.
Zhongzhi's financial troubles stem from its historic exposure to the 2015 stock market downturn and regulatory tightening against shadow banking, culminating in an inability to repay investment products.

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Who’s Who

Zhongzhi Enterprise Group Co. Ltd.: Zhongzhi Enterprise Group Co. Ltd., a Beijing-based financial conglomerate, faced bankruptcy liquidation due to a financial shortfall of 260 billion yuan. Overlapping affiliations and assets with 247 entities necessitated consolidated liquidation to reduce costs and ensure fair creditor repayment. The firm, involved in trust, insurance, leasing, and fund management, struggled with investment losses exacerbated by economic slowdowns and regulations. Key executives have been detained as part of a criminal investigation.

Hang Tang: Hang Tang is one of four Zhongzhi-affiliated wealth management firms whose senior staff, including chairs and presidents, were detained by police in November as part of a criminal investigation into illegal fundraising. This investigation is part of efforts to recoup billions of yuan in investor losses following the dramatic collapse of Zhongzhi Enterprise Group.

Xinhu: Xinhu is one of the four Zhongzhi-affiliated wealth management firms whose senior staff members were detained in November as part of a criminal investigation. The firm, along with others, is likely being investigated for illegal fundraising.

Datang: Datang is one of the Zhongzhi-affiliated wealth management firms whose senior staff members were hauled off by police in November after a criminal investigation was launched. They are likely being investigated for illegal fundraising.

Gaosheng: Gaosheng is one of the four Zhongzhi-affiliated wealth management firms under investigation for illegal fundraising. Multiple senior staff members, including chairs, presidents, and former senior managers, were detained by the police after a criminal investigation launched in November. The investigation aims to recoup billions of yuan in investor losses.

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What Happened When

November 2023：: Multiple senior staff members, including chairs, presidents, and former senior managers of four Zhongzhi-affiliated wealth management firms, were hauled off by police after a criminal investigation was launched.

January 2024：: Beijing-based Zhongzhi's bankruptcy liquidation was accepted after the company disclosed a financial shortfall of up to 260 billion yuan.

March 2024：: Police in Beijing took 'criminal coercive measures,' including arresting or detaining major suspects in the criminal case involving Zhongzhi's wealth management units, or placing them under residential surveillance.

June 28, 2024：: Zhongzhi’s bankruptcy administrator, Beijing Dacheng Law Offices, filed a request for a consolidated bankruptcy liquidation to the Beijing First Intermediate People’s Court.

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