China’s troubled real estate giant Evergrande ousted its Chief Executive Officer and Chief Financial Officer after finding that the two top officers were involved in a loan agreement that allowed banks to take $2 billion from its key subsidiary.

The Wall Street Journal reported that the company investigated the incident after lenders took control of $2 billion of deposits at its primary subsidiary, Evergrande Property Services Group. 

In a company statement on Friday, the board asked its CEO Xia Haijun and CFO Pan Darong to resign for their involvement in the loan arrangements. Several directors also resigned over the incident.

Xia Haijun joined the real estate giant as CEO in 2007. Hui Ka Yan, the company’s founder, still holds Evergrande’s chairman position.

According to Reuters, Evergrande is the world’s most indebted real estate company, with more than $300 billion in liabilities as of June 2021. The property developer struggled with liquidity problems for months, and Evergrande finally defaulted on its U.S.-dollar offshore bonds in December 2021.

The company expects to develop a debt restructuring plan with lenders by the end of July. Creditors focus on its two most valuable sources, the property-services business, and the electronic vehicle unit. 

The New York Times cited an estimate from Barclays saying that as of December 2021, the company had about 800 unfinished projects across China. About 1.6 million homebuyers are still waiting to move into their new homes. 

Since its establishment, Evergrande has become the center of power in the nation’s economy, leaning on the real estate industry for supercharged economic growth.

The Chinese real estate empire has been in trouble for the last couple of years. Chinese authorities cracking down on careless borrowing from developers and the real estate market slowdown are the fundamental problems that led to the company’s downfall.  

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