Commercial Banks Call Loans Ahead of Strategic Defaults and Restructurings

Caixin: Commercial Debt Dodgers Pressure China's Banks
Bankers nationwide are rushing to call loans issued to state-owned and private companies to avoid a rising tide of debt dodging that's not only legal but often supported by the government.

Some companies in the past year have frustrated creditors by declaring bankruptcy, while companies in the steel manufacturing and coal mining industries have used asset restructuring projects to avoid debt obligations.

"Many companies are using bankruptcy and asset restructuring as measures to skip out on bank loan repayments," said a source at a bank who asked not to be named.
The credit guarantee also pops up:
Privately owned companies are also riding the tide of debt dodging. In eastern Zhejiang Province, a hotbed for private entrepreneurship, state media last October reported that more than 700 companies had found ways to avoid repaying 11 billion yuan worth of debt.

Some companies dug out of a hole through legal loopholes or through "mutual guarantee" arrangements widely used for loan backing in Zhejiang.
When all else fails, there's jail:
A Jiangsu bank executive said some strained borrowers have gone so far as to turn themselves into police and confess to crimes such as loan application fraud, thus risking a possible prison term but forcing termination of all loans and loan guarantees, leaving banks holding the bag.

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