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Zhongzhi Enterprise Group Co., one of China’s top wealth management firm has filed for bankruptcy due to the inability to repay its debts, according to a statement from a court in Beijing. Earlier in November, the Chinese authorities had opened criminal investigations on the firm for illegal crimes, days after it had revealed a shortfall of $36.4bn. Early warning signs had started emerging in July, when Zhongrong International Trust Co, a leading trust company controlled by Zhongzhi, missed payments on its investment products. The downfall marks one of China’s biggest-ever bankruptcies exposing potential cracks in China’s $2.9tn trust sector which had extended financing to troubled developers and snapped up real estate assets from companies like China Evergrande Group.
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