Oceanwide Developer and Tycoon Lu Zhiqiang Sued in $1 Billion Loan Dispute

China Minsheng Banking Corp. Ltd. (600016.SH +0.57%), the nation’s largest private equity lender, is fining the developer. Oceanwide Holdings Co. Ltd. (000046.SZ +1.50%) and his real estate manager Lu Zhiqiang over a 7 billion yuan ($1billion) loan dispute.

The bank’s Beijing branch has filed a lawsuit against Oceanwide, Lu and two realtors based in the central Chinese city of Wuhan. The company, named Wuhan Center Building Development Investment Co. Ltd. and Wuhan CBD Co. Ltd., defaulted on debts of 3.97 billion yuan and 3.05 billion yuan, respectively, China Minsheng said in a trading filing on Friday.

Oceanwide and Lu approved the loans and are now on the hook to pay the remaining obligations. The claim has been accepted by the Beijing Financial Court, according to the filing.

It has become common to see corporate creditors go after developers for unpaid debts in China as the real estate sector continues to suffer. countries with water shortages. Triggered in mid-2021 by a series of high-profile scandals, many Chinese real estate companies defaulted on bond and loan payments and eventually went bankrupt. away from much needed sources of income. The country’s housing market remains weak, despite the support of the government and hundreds of billions of state investment.

Lu, the founder and chair China Oceanwide Holdings Group Co. Ltd., the parent of Oceanwide, is also a vice chairman of Minsheng Bank. As of June 2022, the group together with its subsidiaries had 21.2 billion yuan of outstanding loans and Shanghai and Hong Kong-listed loans.

China Oceanwide and related institutions also have a 5.8% stake in Minsheng Bank. About 70.5% of that has been frozen, according to a filing on Thursday.

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The Wuhan Center Building Development Investment and Wuhan CBD took out loans of 4 billion yuan in 2018 and 3.07 billion yuan in 2020 from the lender’s branch in Beijing. It protected them in land and construction projects.

Minsheng Bank is seeking the right of priority to repay the mortgaged property, or the proceeds from the auction or sale, according to the filing on Friday.

Contact the author Zhang Ziyu (ziyuzhang@caixin.com) and director Jonathan Breen (jonathanbreen@caixin.com)

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