Six executives from the troubled property giant China Evergrande illegally sold their investments in the company over the past four months, the company admitted in a statement Saturday.

The revelation comes as the country's second-largest real estate firm by sales is drowning in more than $305 billion (€260 billion) in debt after liquidity from property presales dried up.

"As of May 1, 2021, a total of 44 people, who were then senior executives … held 58 investment products of Evergrande Wealth. From May 1 to September 7, … 6 people redeemed 12 investment products in advance," the company statement said.

The company said it was taking the early redemption seriously. It said that the withdrawn funds "must be returned within a time limit," adding that "severe penalties will be imposed."

Evergrande could default in weeks

China Evergrande is close to collapse following years of borrowing to fund its rapid expansion. Some commentators say its bankruptcy could be China's "Lehman moment" — a reference to the US investment bank Lehman Brothers that went bust during the 2008/9 financial crisis.

The Shenzhen-based property giant is struggling to convince its many creditors to reschedule millions of dollars in liabilities — ranging from loans, bonds, so-called trust products to money owed to contractors and suppliers.

Interest on bonds worth $130 million becomes due in the next 10 days and will default if Evergrande fails to pay within 30 days.

Reuters news agency reported Friday that three of Evergrande's main lenders were either making provisions for losses on some loans or planning to give the firm more time to repay. But much of the firm's debt is not held with banks.

Will Beijing step in?

Some analysts are questioning whether Beijing will step in to either bail out Evergrande or help manage an orderly collapse.

Bankruptcy, even a managed one, would reverberate through the Chinese economy given the firm's liabilities, which are equal to 2% of the country's GDP.

The editor-in-chief of the Chinese Communist Party-backed tabloid the Global Times on Friday warned Evergrande that it was not "too big to fail," and it should not expect to be rescued.

New curbs halted property speculation

Evergrande was already the world's most indebted real estate firm when the Chinese government introduced strict lending curbs in August 2020 to cool the overheating property market.

Reliant on presales to shore up its income, Evergrande has been hard hit by the subsequent property downturn. It has been forced to sell properties at a 25% discount. 

Investors have made down payments on around 1.5 million properties, Bloomberg reported, citing data from December.

Many of those buyers have expressed concern on social media about whether they will get their money back after housing projects were suspended.

With material from DPA and Reuters