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Evergrande Unit Discovers $2.1 Billion of Its Cash Can Be Seized by Banks

  • Services arm says banks enforced third-party pledge guarantees
  • Embattled developer is set to miss earnings reporting deadline
Bloomberg business news
WATCH: China Evergrande assured investors it was on track to provide creditors with a restructuring proposal by the end of July. Source: Bloomberg
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China Evergrande Group’s property-services unit is investigating how 13.4 billion yuan ($2.1 billion) of its deposits were used as security for pledge guarantees and seized by banks. 

The unusual development, which Evergrande Property Services Group Ltd. said it discovered while preparing its annual report, may heighten scrutiny of corporate governance at the real estate empire founded by billionaire Hui Ka Yan. While Evergrande’s main property business has been in financial distress for months, the services unit has long been considered among the stronger parts of Hui’s group. Evergrande and its Hong Kong-listed units also warned of delays in the release of audited financial results.