Wednesday, April 11, 2012

Chinese Lending Scam Business is Liquidated

Liren Group owed 700-800 million dollars to 7000 creditors. The crash came when they failed to obtain bank loans to pay back the creditors. A bit of the reversal on the usual playbook where businesses obtain bank loans at low rates and turn around and lend it out in the shadow banking system.

More than half of nearly 3000 businesses surveyed in Zhejiang had sought loans from the shadow banking system.

Liquidation begins for firm embroiled in lending scam
Authorities also warned local officials who are Liren's creditors not to abuse their power to grab the liquidated assets in advance or to put themselves as prioritized creditors to be repaid first.
 Liren's downfall has raised concerns about private financing risks, an issue that has become particularly relevant in Zhejiang, where private businesses have become a pillar of the prosperous local economy.

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