Major Chinese Shadow Bank Zhongzhi Declares Insolvency, Under Criminal Investigation

With liabilities exceeding its assets by billions, Zhongzhi's insolvency and the subsequent police investigation mark a significant development in China's ongoing real estate debt crisis.

Zhongzhi, one of China's largest shadow banks, has declared insolvency with liabilities up to $64 billion, far exceeding its total assets of about $28 billion.
Beijing police have launched a criminal investigation into Zhongzhi, taking 'criminal enforcement measures' against several suspects, though the specific crimes have not been specified.
Zhongzhi began showing signs of trouble in August when its subsidiary Zhongrong International Trust missed payments on some of its investment products.
Zhongzhi has lent billions of yuan for real estate dealings, a sector currently embroiled in a debt crisis with many of China's big developers having either defaulted or remaining at risk of default.
To prevent troubles spilling into the economy from the property sector, Chinese regulators have drafted a list of 50 developers eligible for financing support.