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Eyeglass maker mortgages properties to secure loans

THE guarantor of a famous eyeglass chain store mortgaged five of his houses in Shanghai to the Bank of Hangzhou after the bank discovered he fled to escape his debts and sued him to court for loan repayment, the Shanghai No. 2 Intermediate People's Court said yesterday.

The court heard a Shanghai branch of the Bank of Hangzhou signed a contract last May to lend 20 million yuan (US$3.17 million) to Shanghai Xiwen Trading Co, owner of the famous eyeglass franchise "American Eyes."

Under the contract, Xiwen shall pay interests quarterly and return all the money by March 9 this year. The bank has the right to withdraw its loans if Xiwen is found to have financial problems and is unable to pay its debts, the court heard.

The bank said the guarantor of this contract, Zhejiang Center Group, which is China's largest eyeglass maker, has suffered a severe debt crisis since last September.

The bank tried to get its money back after media reports that Hu Fulin, president of the group, had fled to the United States on September 21, leaving behind 1.5 billion yuan in debts owed to both banks and individual creditors.

Hu returned to China in October after other banks agreed to relax repayment terms.

Hu told the court that the government of Wenzhou City where his company is based has been helping his company. He asked the bank not to withdraw the loans and agreed to mortgage his houses in Shanghai to the bank.

The two parties signed an agreement with the court's mediation.


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