EC World Real Estate Investment Trust (EC World REIT) announced an update on the RMB 3.515 billion guarantee issued in Dec, 31 2021 by its indirect subsidiary, Hangzhou Chongxian Port Investment (Beigang), and several non-group entities in favour of Hangzhou Fenhua Investment LLP (HZFH). A first-instance judgment from the Hangzhou Intermediate People’s Court on May, 06 2026 held Beigang jointly liable for the full amount. One of the co-guarantors has since appealed, and a second-instance hearing is set for Aug, 11 2026, during which enforcement against Beigang is suspended.

The Manager said EC World REIT had no prior knowledge of the guarantee, noting that corporate seals were affixed without authorisation by personnel of its sponsor, Forchn Holdings Group. Internal inquiries show the sponsor’s former staff used a paper-based approval process to obtain EC World REIT’s stamps, bypassing the trust’s electronic approval system.

If the appeal fails and the judgment becomes final, HZFH could demand full or partial payment from any of the 24 guarantors, including Beigang. Given the claim’s size relative to Beigang’s net assets, the Manager warned that Beigang might face bankruptcy and liquidation, though lenders holding first-ranking mortgages over Beigang’s properties would have priority in any enforcement proceeds. Meanwhile, the Manager has secured all company seals, begun a comprehensive internal controls review, tightened service-of-process measures, and initiated searches of property, corporate and litigation records across its China subsidiaries.

The board is evaluating options to isolate Beigang from the rest of the trust to safeguard other assets and will update unitholders upon material developments. Investors are advised to exercise caution when dealing in EC World REIT units.