Zhejiang real estate companies acquired land at high prices and 19 banks were involved in the case with a debt of 3.5 billion

The father and son Shen Caixing and Shen Mingchong, well-known real estate developers in Fenghua, Ningbo, Zhejiang Province, are both behind bars. According to information released by local officials, the Shen family and his son's capital chain was broken due to poor management, with liabilities of 3.5 billion yuan and total assets of 3 billion yuan, making them insolvent.

Real Estate Enterprises

The core enterprise of Shen and his son is Zhejiang Xingrun Real Estate Investment Co., Ltd. (hereinafter referred to as "Xingrun Real Estate"), and has many local affiliated companies or projects company. This matter quickly attracted attention from the outside world, and the "collapse" of Xingrun Real Estate was regarded as a sample of the gradual change of the property market, especially small and medium-sized developers.

According to official data, of the 3.5 billion yuan in debt, banks accounted for more than 2.4 billion yuan, and there were 7.8 billion yuan in private loans with factual evidence, involving 98 people, including 7 people from government agencies. There are a total of 19 banking institutions involved in the case, located in Fenghua, Ningbo and Hangzhou. The bank with the largest loan limit is China Construction Bank, with more than 1.2 billion.

The protagonist of the Xingrun Real Estate incident is Shen Caixing, a native of Xiangshan County, Ningbo City, Zhejiang Province. He was born on October 18, 1953. Before the incident, he was a member of the Fenghua CPPCC and the president of the Real Estate Association. He has been engaged in the construction industry since August 1971. He was the chairman (legal representative) of Zhejiang Xingrun Construction Co., Ltd. when the incident occurred.

In November last year and January this year, Shen and his son were arrested by the local police on suspicion of illegal fund-raising. At present, the case has been transferred to the Procuratorate by the local police.

A reporter from the 21st Century Business Herald investigated and learned that the break in the capital chain is not unrelated to Xingrun Real Estate’s previous high-priced land acquisition, slow return of high-end projects, and contraction of bank credit.

Another incident surrounding Xingrun Real Estate that has been ignored by the outside world is the murder of Fang, a partner of the Xiangshan Meidi project developed by Xingrun Real Estate. The local police said it was a suicide. A person who was close to Fang previously revealed that Fang was involved in loan sharking, real estate, entertainment and other fields. Family members still have doubts about Fang's "suicide".

This is like a chain. The Fang incident revealed the financial bottle that the developer had originally concealed, and the suspected illegal fund-raising behavior of Shen and his son was also exposed, and even attracted the attention of foreign media.

On March 18, the central bank’s official Weibo released news, stating that individual foreign media reports that “the People’s Bank of China urgently discussed rescue of small real estate companies” were inconsistent with the facts, and the People’s Bank of China did not participate in the risk management related to Zhejiang Xingrun Real Estate.

Some media asked China Construction Bank, the main borrower of Xingrun Real Estate, for verification and learned that the "emergency meeting" was actually led by the local government, with the local banking regulatory bureau, Fenghua Branch of the People's Bank of China and colleagues from China Construction Bank Participated in a communication and coordination meeting.