From Fortune:

1. Zhongzhi Enterprise Group, a Chinese shadow bank with deep ties to the country’s property sector, has filed for bankruptcy, as it no longer has the means to pay off its debts, according to a statement from Beijing’s First Intermediate People’s Court, reports Fortune.

2. Zhongzhi looked troubled for months, with the group calculating its total liabilities at around $59 billion to $65 billion, and its tangible assets at just $28.2 billion, creating a shortfall of $36.4 billion, according to a letter to investors.

3. Zhongzhi’s troubles emerged as early as August, and Chinese authorities opened criminal investigations against Zhongzhi just days after the firm announced its shortfall in late November, Fortune reports.

4. Beijing has decided that bankruptcy would be the most effective approach to limit the effect of Zhongzhi’s struggles on financial markets, according to Bloomberg, citing anonymous sources.

5. China’s shadow banks, like Zhongzhi, operate outside the rules that govern traditional banks, working with wealthier customers, moving funds, and growing nearly $3 trillion industry, as China aims to tighten regulation.

6. As a result of China’s property crisis, Zhongzhi is the latest casualty from China’s long-running property crisis and the property sector is a third of China’s economy.

7. Throughout the crisis, Zhongzhi affiliates provided loans to troubled developers and bought assets from companies like Evergrande, as the world’s most indebted developer faces liquidation hearing.

8. China’s property sector is still dealing with its slump, as home sales during the New Year holiday saw a 26% year-on-year decrease, prompting Beijing to attempt to revive demand.



Read more: China real estate crisis: Shadow bank Zhongzhi declares bankruptcy