Creditors Register in Liren Collapse in Wenzhou

This case is a harbinger of what is to come as part of a messy unwind in China. Wenzhou is the epicenter of publicly funded lending.

Firm risks bankruptcy amid lending fight

The Beijing-based newspaper Economic Information reported on Friday that more than 7,000 people have registered as being creditors of Liren Group, but local authorities said the number is much smaller.
"We started to register creditors on Tuesday, and more than 200 people register each day on average," said the director of Taishun county's information office.

Liren Group, a company that started by opening a private school and later came under suspicion from authorities during a government campaign against illegal fundraising, may have to declare itself insolvent, the auditing firm said on Friday.

"I expect its net assets are lower than half of its debts, which surpass 4.5 billion yuan ($700 million), according to the company's financial statement," said Liu Xuhai, chairman of the Zhongyuan Auditing Firm.

Apparently this is one of the warning signs of an imminent collapse in one of these schemes:

In November, the company announced it would stop paying off debts in cash, citing "financial difficulties". Instead, it offered to repay creditors using debt-to-equity swaps, property and free school tuition.

(Liren was originally a school. Before it got into real estate and mining and a host of other things.)