Market regulators in Hong Kong suspended trading Thursday in shares of the troubled Chinese property giant Evergrande after reports founder and chairman Hui Ka Yan is under house arrest.

Trade in Evergrande derivatives was also halted, indefinitely, the Stock Exchange of Hong Kong said in a trading notice, only a month after trading resumed following a 17-month suspension.

"Due to the suspension of trading in the underlying shares, trading in futures and options for China Evergrande Group have been suspended until further notice," the notice said without providing further explanation for the action.

However, the suspension came three days after Its mainland division Hengda Real Estate defaulted, missing a scheduled payment Monday on a $547 million bond issue. The company blamed the default on an inability to roll over the debt due to Hengda being under investigation by the China Securities Regulatory Commission.

Hui was reportedly placed under residential surveillance by Chinese authorities earlier this month with other current and former executives rounded up in recent days. Hui is not under arrest and has not been formally accused of any crime.

However, a number of employees of Evergrande's wealth management unit are under arrest after being detained on Sept. 18 in Shenzhen, just across the border from Hong Kong. It was not immediately clear whether the individuals had been charged with any criminal offense.

The suspension of its shares is the latest blow for the embattled company which is due in court in Hong Kong on Oct. 30 to try to fend off a winding-up petition by its creditors.

The property developer, which first defaulted in 2021, has liabilities of about $328 billion, much of it owed to ordinary Chinese people with down payments on apartments and houses that have either not been built or remain unfinished. Evergrande's cash flow woes have also left its suppliers highly exposed.

In July, the group reported that it had lost a combined $81.1 billion in 2021 and 2022, mostly through payments to suppliers and lenders, as it battled to finish more than 1,000 thousand projects in 280 cities.

Evergrande filed for Chapter 15 bankruptcy protection on Aug. 17 in New York to gain breathing space to restructure debt accumulated over 15 years as it strove to become one of China's leading companies.

The group said at the time that it was seeking recognition of restructuring talks underway in Hong Kong, the Cayman Islands and the British Virgin Islands.

Evergrande is the most high-profile symbol of a looming real estate crisis that poses a real threat to China's economy as the country wrestles with a shaky economic reopening from three years of COVID-19 lockdowns and restrictions.

A number of other big Chinese developers have defaulted during the past 12 months with many more struggling with cash flow or access to lines of credit to finish projects.

In a filing to HKEX, the day before trading in its shares resumed Aug. 28, the company said it lost $4.5 billion in the half year to June 30, down from $9 billion in the same period in 2022, with directors taking "a number of measures to improve the liquidity position and financial position of the group."

Revenue was up 44% to $17.5 billion compared with the January-to-June period in 2022, but cash holdings were down by 6.3%.

Evergrande's problems have had a knock-on effect on the whole real estate sector, estimated to make up a third of China's economy, leading to other developers defaulting on their debts and leaving a trail of unfinished developments across the country.

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