Tao Shoulong, former head of Zhejiang Jianglong Textile Printing & Dyeing Co., and his wife were arrested in southern China's Guangdong province, Qi Xiaoning, a spokesman for the local government in the eastern Chinese city of Shaoxing, confirmed in a phone interview.
Shaoxing-based Zhejiang Jianglong, which derived about three-quarters of its revenues from overseas sales, shut down suddenly last month, saying it was unable to honor 2 billion yuan ($292 million) in debts. About the same time, Tao and his wife, Yan Qi, disappeared after allegedly burning the company's accounting records, reports by the official Xinhua News Agency and other state-run media said.
"Frankly, I feel a bit sympathetic toward Tao. He borrowed such a huge amount of money just to try to get the company through hard times, but in fact he couldn't repay it," Qi said.
Thousands of Chinese factories have gone bankrupt this year, many of them even before export demand was clobbered by the global credit crisis.
Shares in Zhejiang Jianglong's Singaporean-traded unit, China Printing & Dyeing Holding Ltd. were suspended from trading last month. On Tuesday, Singapore's High Court ordered the company to be put under judicial management as it attempts to recover from its financial crisis, China Printing & Dyeing said in a notice on its Web site.
Meanwhile, Shaoxing local authorities are preparing to auction off Zhejiang Jianglong's assets to help cover its debts, Qi said.
"So far, some companies are showing interest and discussions are under way," he said.
