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Shares of Evergrande have been suspended amid reports its chairman is under surveillance

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Shares of Evergrande were suspended on Thursday, Hong Kong’s exchange announced. Seen here are residential buildings under construction at the Tao Yuan Tian Jing project, developed by China Evergrande Group, in Yangzhou, China.
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Shares of China Evergrande Group

The chairman of the embattled Chinese real estate developer has reportedly been placed under surveillance, according to Bloomberg News.

Evergrande shares last closed at 32 Hong Kong cents on Wednesday.

This is not the first time that Evergrande’s shares have been suspended. Trading was suspended in March last year and only resumed trading on Aug. 28, after a 17 month hiatus.

Late Wednesday, Evergrande reported a loss attributable to shareholders of 33 billion yuan ($4.15 billion) for the six months ended June. Operating loss stood at 11.72 billion yuan, down from 39.36 billion in the first half of 2022.

In July, the company posted a combined net loss of $81 billion for 2021 and 2022, in its long overdue earnings report. That compares to a net profit of 8.1 billion yuan in 2020 — before the company went into default.

Just this month, Evergrande delayed a debt restructuring meeting with creditors, saying in a filing “the sales of the Group has not been as expected by the company” since its March debt restructuring announcement.

As such, Evergrande “considers it necessary to re-assess the terms of the proposed restructuring to meet the company’s objective situation and the demand of the creditors.”

The company also revealed that due to an investigation into subsidiary Hengda Real Estate, it was unable to issue new notes under its debt restructuring plan.

Reuters reported the Evergrande unit was being investigated by the Chinese securities regulator for suspected violation of information disclosure.

The latest development comes a week after police detained some staff at Evergrande’s wealth management unit.

In August, Evergrande applied for Chapter 15 bankruptcy protection in a U.S. court, which allows a U.S. bankruptcy court to intervene in cross-border insolvency cases involving foreign companies that are undergoing restructuring from creditors.

Tianji Holdings, an affiliate of Evergrande, and its subsidiary, Scenery Journey, also filed for Chapter 15 protection in Manhattan bankruptcy court, according to the filing.

Evergrande defaulted in 2021 and announced an offshore debt restructuring program in March, having struggled to finish projects and repay suppliers and lenders.

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