Beijing: The son of a Chinese property tycoon has been barred from leaving the country because of his involvement in a loan dispute, a person familiar with the matter says, highlighting the risks to executives caught up in a years-long real estate crisis.
A court in Hangzhou issued the exit ban against Zhang Liang last month, said the person, asking not to be identified as the matter is private.
The court said that Zhang failed to fulfill a guarantee on a borrowing made by his company, Chinese builder Seedland Real Estate, where he is the controlling shareholder, the person added.
The court had earlier ruled that Zhang was responsible for the debt, the person said.
Zhang is the son of Zhang Li, one of the co-founders of developer Guangzhou R&F Properties Co. Despite the exit ban, there is no indication that Zhang is in detention.
In many countries, people involved in unresolved civil cases can be barred from leaving the country.
The legal battle underscores the challenges creditors face in recouping funds from Chinese companies.
But it also shows that there can be consequences for executives if they don’t settle these disputes.
Individuals can be held responsible if they provide guarantees on loans, which has become common among struggling builders since the property crisis began, according to people familiar with the matter.
The dispute over the loan can be traced back to 2022, the person added.
Creditor JIC Trust Co at the time sued Seedland, several of its units, and a person surnamed Zhang over a 1.16bil yuan or about US$160mil borrowing, according to corporate database Tianyancha.
Calls to Seedland, JIC Trust and the court in Hangzhou went unanswered. JIC didn’t immediately reply to an emailed request for comment. — Bloomberg
