3.6 trillion disillusionment, the planting system was applied for substantial merger and bankruptcy liquidation

Winshare News

2024-06-28 19:47

Comprehensive丨Observer Xie Di Proofreading See you in the summer

248 enterprises, including Zhongzhi Enterprise Group Co., Ltd., were applied for substantive merger and bankruptcy liquidation.

On June 28, according to Zhongzhi Enterprise Group, Beijing No. 1 Intermediate People's Court issued an announcement saying that the manager of Zhongzhi Enterprise Group Co., Ltd. submitted an application to this court on June 28, 2024, saying that Zhongzhi enterprises have complex related relationships, wide distribution of property, and huge debts. According to the investigation of the administrator, 247 enterprises such as Zhongzhi Enterprise Group Co., Ltd. and Zhonghai Shengfeng (Beijing) Capital Management Co., Ltd. are highly related and their legal personality is highly mixed, and the cost of distinguishing the property of 248 enterprises such as Zhongzhi Enterprise Group Co., Ltd. is too high, and the bankruptcy liquidation alone will seriously damage the fair repayment interests of all creditors. Therefore, it applied to this court for substantive merger and bankruptcy liquidation of 248 enterprises including Zhongzhi Enterprise Group Co., Ltd. (hereinafter referred to as: medium plant or middle plant system)

There are early signs of disillusionment in the middle plant. As early as 2022, there are rumors in the market that the development of the "planting system" is too aggressive, and a large number of ultra-high investment products are set up, which may lead to product redemption risks when encountering market fluctuations.

In October 2023, Zhongzhi Group publicly admitted that the company had liquidity problems and that related products were in material default, and apologized to investors.

According to the calculation of the simulated merger of intermediaries, the book amount of the total assets of Zhongzhi Group is about 200 billion yuan, and the principal and interest scale of related liabilities after excluding the margin is about 420 billion to 460 billion yuan, and the resources available for debt repayment in the short term are far lower than the overall debt scale.

Zhongzhi Group said in the open letter that the group's liquidity has dried up, it has become seriously insolvent, and there is a significant risk of going concern.

The large-scale self-explosion crisis of the planting system has caused huge market turmoil. A large number of investors were in a huge panic, and regulators were quick to step in to investigate.

According to public information, Zhongzhi Enterprise Group was founded in 1995, mainly engaged in paper material management and real estate development in the early days, and carried out shareholding reform in 1999 to establish Zhongzhi Enterprise Group Co., Ltd.

In 2001, Zhongzhi Group entered the field of financial industry and vigorously developed real estate development business.

In 2002, it began to vigorously develop the trust business, and gradually developed into a comprehensive enterprise group covering real industry, asset management, financial services, wealth management and other fields.

Zhongzhi Group strategically participates in or controls 6 licensed financial institutions, including Zhongrong Trust, Zhongrong Fund, Hengqin Life Insurance, Hengbang Property Insurance, and holds Zhongrong Huixin Futures and Zhongrun Financial Services.

The total scale of wealth management products involved in the four major wealth companies such as Hengtian Wealth exceeds 3 trillion yuan, and the number of investors involved exceeds 1 million. The annualized rate of return of these wealth management products is generally between 8% and 12%, which is much higher than the market average.

The planting system once invested in a number of listed companies and built a huge capital territory. According to public information, the planting system has been with Zhongnan Culture, *ST Baode, Damingcheng, Kangsheng shares, Kane shares, quasi-oil shares, Meijim, Farsheng, Dahua Intelligence, Quanyin Hi-Tech and other more than 20 listed companies have various associations, and actually control 9 listed companies, namely Meierya, Kane shares, quasi-oil shares, Kangsheng shares, Meijim, Yushun Electronics, Haochen Medical, Tianshan Biology, Baode shares.

However, with the transformation of China's economy and the downturn in the real estate industry, the revenue of the "Zhongzhi system" began to have problems, the yield of its products was sluggish, and liquidity was difficult.

In 2021, Xie Zhikun, the founder of Zhongzhi Group, passed away due to illness, plunging the company into chaos. Due to the high dependence of the group and its subsidiaries on the decision-making of the actual controller, the internal management is in a state of failure, which accelerates the collapse of the already stormy "planting system", and its products have been thunderstorming one after another.

On November 25, 2023, the Chaoyang Branch of the Beijing Municipal Public Security Bureau reported that recently, the Chaoyang Branch of the Beijing Municipal Public Security Bureau filed a case for investigation of the suspected illegal crimes of the wealth company belonging to the "Zhongzhi Department" in accordance with the law, and took criminal coercive measures against Xie Moumou and other criminal suspects.

Since then, senior managers of Zhongzhi have been taken away for investigation. According to statistics, from November 2023 to January 2024, nearly 100 people of Zhongzhi Group and its subsidiaries were investigated and questioned or taken criminal coercive measures.

On January 5, 2024, the Beijing No. 1 Intermediate People's Court stated that it would accept the bankruptcy liquidation case of Zhongzhi Enterprise Group Co., Ltd. in accordance with the law, and the debtor, Zhongzhi Enterprise Group Co., Ltd., applied to the court for bankruptcy liquidation on the grounds that it could not pay off its due debts, its assets were insufficient to pay off all its debts, and it obviously lacked solvency.

The bankruptcy of the planting system is the painful price of blind radicalization in the process of China's economic development, which has an asset scale of up to 3.6 trillion yuan, involving a large number of enterprises and huge investors. Now, with bankruptcy hammered, everything is in ashes.

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