Evergrande crisis deepens: Chairman under surveillance; trading suspended as liquidation looms

China’s Evergrande Group, already grappling with an unprecedented debt crisis, has plunged further into uncertainty as trading in its shares was suspended amid reports that the company's chairman, Hui Ka Yan, had been placed under police surveillance.

The suspension of trading on the Hong Kong stock exchange comes just a month after Evergrande resumed trading following a 17-month break. The development intensifies concerns over the weighed down property developer's future, which faces a growing threat of liquidation.

Previously, Bloomberg News reported that Hui Ka Yan, the visionary founder of Evergrande, had been taken into police custody earlier this month and was currently under surveillance at a designated location. The reasons behind this move remain unclear, and Reuters could not independently verify the news.

Evergrande, with over $300 billion in liabilities, equivalent to the GDP of Finland, has become the symbolic figure of China's property sector's debt crisis, a sector contributing about a quarter to the nation's economy. The company's woes deepened recently when it disclosed its inability to issue new debt due to an investigation into its primary China unit, further complicating its proposed restructuring plan.

A major offshore creditor group of Evergrande has signalled its intention to join a liquidation court petition against the developer if a new debt restructuring plan is not submitted by the end of October. Consequently, the prospect of Evergrande's restructuring plan falling apart looms large, heightening the risk of liquidation, according to analysts.

According to a report by The Guardian, the halt in trading not only affects Evergrande's Hong Kong-listed shares but also extends to its property services and electric vehicle units, all suspended as uncertainties mount.

The recent developments surrounding Evergrande have raised questions about the reasons behind Hui Ka Yan's residential surveillance, which falls short of formal detention or police arrest and does not imply criminal charges. Earlier this month, several employees of Evergrande's wealth management unit were arrested in Shenzhen on unspecified charges, further contributing to the company's mounting troubles.

(With inputs from Reuters)

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