Chinese investment manager, Zhongzhi Enterprise Group announced that it will carry out debt restructuring following the liquidity crisis it is facing.
Zhongzhi, exposed to a cash crunch in China's real estate sector, said it had stopped paying investors in all its investment products.
This follows reports earlier in the week about its failure to repay investment products to two listed companies, which offer savers and companies higher returns than traditional banks.
In the wake of that, it has hired one of the Big Four accounting firms to conduct a comprehensive audit of the company, and is looking for a strategic investor, its management told investors in a meeting Wednesday.
Its financial woes are the latest challenge for China's government, which continues to struggle to contain a real estate crisis and revive the world's second-largest economy.
Asset managers like Zhongzhi raise hundreds of billions of dollars by selling 'shadow banking'-related investment products and high returns through trust and wealth management units, and have strong relationships with banks and other financial firms.
