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Chinese investors try to storm company after P2P lender failure

[BEIJING] In the latest sign of turmoil in China's once booming peer-to-peer (P2P) lending sector, around 80 investors in failed lender Xinhehui protested outside the Hangzhou headquarters of a related company on Tuesday, demanding a US$330 million bailout.

The investors voiced their fury and scuffled with police at the entrance to the headquarters of Meidu Energy Corp, which owns about a third of the failed lender. Though no clear demands could be discerned from videos seen by Bloomberg, an investor who was there said the demonstrators were trying to put pressure on the company to pay off the defaulted products. One could be seen holding a sign saying "Meidu bailout".

Mrs Xue, who would only provide a surname for fear of retaliation, said she arrived at 8am with around 80 other investors from Zhejiang and neighboring provinces, demanding payment for 2.26 billion yuan (S$452 million) of products that Xinhehui had sold, including 860 million yuan (S$172 million) worth that were due for repayment on Jan 6.

"Our protests have come to no avail, there is still no solution, and the company is just biding their time, waiting for us to run out of strength," she said in an interview over WeChat. She claimed that she and family members had invested 2 million yuan (S$399,972) in Xinhehui.

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According to a statement on Xinhehui's website dated Jan 14, a majority of votes cast approved a restructuring plan. A customer service representative for the company contacted on Tuesday confirmed this. Mrs Xue said she knew about the vote, but didn't participate.

According to another protestor surnamed Cao, police on site asked them not to display banners or chant slogans. In one of the videos, a woman with a bloody nose is seen receiving treatment, although there is no indication of how she was injured. The protest died down in the afternoon, with most of the participants going home, according to Mrs Xue.

Shanghai-listed Meidu Energy said earlier this month that it owns a 34 per cent stake in Xinhehui. A company representative said on Tuesday that they couldn't help the protestors.

"We are purely a stakeholder and there is nothing more we can do - all of our investments into Xinhehui are already in place," said a company securities representative who would only provide the surname Wang. She said by phone that she was aware of the situation outside the office, but that the demonstration would achieve nothing more than disrupting the workday.

Chinese leaders are dramatically shrinking the P2P market, which spawned the nation's biggest Ponzi scheme, protests in major cities, and life-altering losses for thousands of savers. Authorities are planning to wind down small- and medium-sized P2P lending platforms nationwide, Bloomberg reported late last year.

BLOOMBERG