2 cities in China have repossessed land owned by Evergrande amid scrutiny over assets of the debt-laden developer

• The land planning authority in the city of Chengdu said that it has taken over two plots of idle land from Evergrande.
• This follows a similar move by Haikou city earlier.
• The Chinese government can take back land if it has been sitting idle for more than two years.

Two cities in China have repossessed land from cash-strapped real estate developer Evergrande.

Last Friday, the land planning authority of the southwest city of Chengdu announced it had taken over two plots of land that had been sitting idle for over a decade. According to the notices, the two plots total over 340,000 sq. meters (31,587 sq. ft.).

According to a government notice published last Monday, Haikou city, located in Hainan province in southern China, took back eight plots of land from Evergrande for similar reasons.

Under Chinese law, the government can take back land that has been sitting idle for two years without having to compensate the property owner.

This latest move comes as China’s government stepped in to oversee Evergrande’s debt crisis. The company announced earlier this month that there was “no guarantee” it would have enough funds to meet debt repayments. Authorities have started auditing the assets of Evergrande and its billionaire founder, Hui Ka Yan, Reuters reported last week.

Shenzhen-headquartered Evergrande is the world’s most indebted property developer, with $300 billion in liabilities. Investors fear its collapse could have a domino effect on China’s economy — possibly sending the rest of the world into a financial crisis.

The Chinese government has signaled there will be no outright bailout for Evergrande. However, authorities have asked government-owned firms and state-backed property developers to buy some of Evergrande’s assets, Reuters reported in September.

Guangzhou city authorities have also taken over Evergrande’s soccer stadium and plan to sell it, as construction has come to a stop, Reuters reported last month, citing a person with direct knowledge of the matter.

Evergrande has divested some businesses to raise cash, including Chinese streaming platform HengTen and Dutch electric motor maker e-Traction.

S&P Global and Fitch Ratings recently said they consider the property giant to be in default.