Taiwan's Leading Rental Management Firm Zhaoki Group's Affiliates Face TWD 10 Billion Debt Crisis! Chairman Admits Investment Failure, Bonds Unpayable

Taiwan's leading rental management company, Zhaoki Group, and its affiliated companies—Zhaoji Investment and Hermit Crab Management Consulting—are reportedly unable to repay issued corporate bonds. According to ETtoday News Cloud, 187 investors have formed a self-help association. Based on conversation recordings provided by investors, Zhaoki Group Chairman Li Chien-cheng admitted the company failed to fulfill its obligations due to investment losses and acknowledged internally detecting financial difficulties as early as April.

However, the two companies continued raising funds and issuing corporate bonds from May to July. Whether they failed to adequately disclose critical information remains to be clarified by further investigation by prosecutors and police.

One investor stated they had invested approximately TWD 9 million, with both principal and interest now frozen, saying, "I'm truly on the verge of collapse." Li Chien-cheng personally explained the funding shortfall and proposed a stock compensation plan to investors. According to investor-provided transcripts, Li stated the company could not repay as agreed due to investment failure, not due to short-term cash flow issues. He also acknowledged awareness of financial problems since at least April. Lin Yu-jen, the responsible executive at Hermit Crab Management Consulting who managed fund operations, had reportedly consulted a lawyer at the time and was advised to turn himself in.

Chairman Li proposed settling debts using approximately 16,000 shares of unlisted Zhaoki Property Management stock. Valued at TWD 70 per share, the total is estimated at TWD 1.12 billion. However, Li warned that if he were detained, it would hinder subsequent stock disposal and repayment arrangements, urging investors not to immediately pursue legal action.

The self-help group questioned why the companies continued fundraising and issuing bonds from May to July despite knowing of significant financial gaps. Whether critical information was fully disclosed and whether fund usage was appropriate awaits clarification by prosecutors and police. Regarding Li's proposal to settle debts with unlisted shares, investors pointed out that Zhaoki Property Management is not the bond issuer, and as the stock is unlisted, it lacks public market trading, making its actual value, liquidity, and transfer conditions highly uncertain. Moreover, if the affected amount is close to TWD 10 billion as Li claimed, the TWD 1.12 billion in stock would cover only about 10% of the losses.

The self-help group plans to trace the flow of raised funds and remaining assets, and will consult legal counsel to assess whether the two companies' bond issuance procedures were legal, and to clarify potential legal liabilities, including fraud, breach of trust, or violations of the Banking Act.

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