China Evergrande announced through a statement on Friday that their CEO Xia Haijun and CFO Pan Darong have resigned. This followed a preliminary probe which discovered their involvement in using RMB 13.4bn ($1.99bn) of deposits as collateral for third parties to obtain bank loans, which some borrowers failed to repay. These pledges threatened to wipe out most of the cash that their public listed unit was holding. Siu Shawn, who was an executive director and chairman of the group’s EV unit, will take over as CEO. Separately, global investors are watching the Chinese developer as the deadline of End July for its preliminary restructuring plan approaches, as per Bloomberg. Bloomberg notes that there might be greater scrutiny because many see the Evergrande restructuring as a potential precedent for dealing with the widespread defaults and restructuring in China’s property sector. Siu said that the “firm has reached basic consensus on debt restructuring principles with multiple major global creditors.”

Evergrande’s dollar bonds are currently trading at distressed levels of ~4-8 cents to the dollar.

In other Chinese real estate news, Jingrui Holdings has declared that it is not capable of repaying the principal and interest on its 12% 2022s, due on July 25. The principal and accrued interest that must be repaid is worth $260mn and $15.6mn respectively. Other creditors might seek to accelerate repayment of the rest of the group’s debt following the default.

The bond in question is currently trading flat at 17.9 cents to the dollar.

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