The Chinese shadow banking giant whose liquidity crisis has fanned fears about financial contagion is planning to restructure its debt and has hired KPMG to conduct an audit of its balance sheet, people familiar with the matter said, reports the South China Morning Post.
Zhongzhi Enterprise Group hired KPMG in late July to review its balance sheet amid a worsening liquidity crunch, said the people, asking not to be identified as the matter is private. The Beijing-based company plans to restructure debt and sell assets after the review to repay investors, the people said. The company manages more than RMB 1 trillion yuan ($137 billion) of assets.
It was not immediately clear how many products Zhongzhi has defaulted on and whether the company has sufficient assets to cover the shortfall if liquidated, said the people, adding that any restructuring process is likely to be lengthy. Zhongzhi has suspended payments on nearly all its products, the people said.