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Consumer Discretionary

Eratat Lifestyle (ERAT SP)

Year: 2014

In January 2014, Eratat defaulted on a RMB4.2m interest payment despite reporting cash of RMB584m just a few months earlier. After the default, the company's Chinese management, including its CEO, refused to co-operate or communicate with the Board of Directors. It transpired that real cash balances were only RMB73,000. The company was a typical Chinese fraud in that fake profits had been parked in cash and receivables. The real business was likely a fraction of what was reported and funds raised externally had either been used to support the business (which was likely loss-making) or embezzled. 

Last updated 6 September 2021

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