Police detained Dong Shunsheng, chairman of the Wenzhou Liren Educational Group and froze the firm's assets, the newspaper said.
The company had earlier announced that it owed debt of about 2.2 billion yuan ($349 million) to about 1,000 people, the newspaper said.
There are far more IOUs floating around than there is capital to pay them. The great unwind sure seems unlikely to come off smoothly. If you are the Chinese, how do you even go for the save, no matter how much money you are willing to dump in?
the company has CNY 2.2billion outstanding, not all are convinced by this number, and one lawyer estimated that the total debt raised from these non-bank sources amounted to CNY7-8 billion over the years. As the Wenzhou mess hit hard last year, the company went bust, and since November last year, the company has stopped paying down debts and interests. While the company is being restructured, not all creditors are happy. At the end, the chairman of the company and 6 other directors arrested.
Hat tip: ATP at VREAA