Troubled China shadow bank Zhongzhi files for bankruptcy

The headquarters of Zhongzhi Enterprise Group Co. in Beijing. (photo: Bloomberg)

Chinese shadow banking giant Zhongzhi Enterprise Group Co. has filed for bankruptcy after saying it’s insolvent.

Beijing’s First Intermediate People’s Court decided to accept the case, according to a statement on the court’s Wechat account Friday.

In November, Chinese authorities said they opened criminal investigations into the money management business of the group. The firm earlier revealed a shortfall of $36.4 billion on its balance sheet.

Shadow banks like Zhongzhi are loosely regulated firms that pool household savings to offer loans and invest in real estate, stocks, bonds and commodities. In recent years, even as rival trusts pared risks, Zhongzhi and its affiliates, especially Zhongrong International Trust Co., extended financing to troubled developers and snapped up assets from companies including China Evergrande Group.