Chinese shadow banking giant Zhongzhi Enterprise Group Co. has filed for bankruptcy after saying it’s insolvent.
The firm had earlier revealed a $36.4 billion shortfall on its balance sheet, and the company’s debts are estimated to be between $59 billion and $64.6 billion.
That amount is more than double the group’s assets.
Shadow banks like Zhongzhi are loosely regulated firms that pool people’s savings to lend and invest in real estate, stocks, bonds and commodities.
Recent years have seen Zhongzhi and its affiliates, particularly Zhongrong International Trust Co., provide risky financing to troubled real estate developers and purchase assets of companies such as China Evergrande Group, in spite of other trusts reducing risk.