“Many People Will Be Arrested” – Evergrande Lured Retail Investors Into Billions Of “Wealth Management Products” With Gucci Bags, Dyson Air Purifiers

from Zero Hedge

In our post detailing how Evergrande became a “too big to fail” anchor of China’s shadow banking system, we noted that a key missing piece in the company’s funding was selling wealth management products – i.e., unregulated “shadow banking” products – to outside investors, as well as its own employees and their families, promising returns up to 13%. It is these WMP investors that are currently besieging the company’s offices across the country in hopes of getting some of their principal back, and which include everyone from paint suppliers to decoration and construction companies. To them, Evergrande owes more than 800 billion yuan ($124 billion) due within one year, while it has only a 10th of that amount of cash on hand. It will have even less once the now officially defaulted company makes priority payments to its banks and creditors.

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