Xinhua Trust let its shareholder run its books — became China's first bankrupt trust firm

Xinhua Trust ran into trouble as early as 2014, when a wave of project defaults led regulators to suspend all of its collective trust business; it did not get approval to resume until 2017, and business stayed weak afterward. A regulatory review later found 13 separate violations: the trust had approved related-party transactions with its own controlling shareholder without prior reporting or proper authorisation, let those affiliates falsely remove assets from its books, and approved investments on the shareholder's behalf that produced large losses.

In July 2020, China's banking regulator placed Xinhua Trust under receivership alongside eight other financial institutions tied to the same conglomerate shareholder, citing large-scale misappropriation of funds by that shareholder across the group. The receivership was extended a year later, and an attempt to publicly recruit new investors to recapitalise the company stalled through slow equity negotiations.

The company entered bankruptcy proceedings in July 2022, and on May 26, 2023 the Chongqing Fifth Intermediate People's Court formally declared Xinhua Trust bankrupt — confirming it could not pay its debts and that its assets fell short of covering them, with a first batch of undisputed creditor claims already totalling more than ¥3.6 billion. It became the first licensed trust company to be declared bankrupt since China's Trust Law took effect in 2001.