(Yicai Global) July 19 -- Shares in China Evergrande Group crashed as much as 17 percent today after the heavily indebted property developer announced that it will sue China Guangfa Bank for abusing a legal clause that allows a plaintiff to apply to freeze company deposits and assets before a lawsuit is filed.

Evergrande’s stock price [HKG:3333] closed down 16.22 percent at HKD8.21 (USD1). Earlier in the day it sank to HKD8.12. Its units’ shares and bonds did just as badly.

The Yixing branch of Guangzhou-based Guangfa bank has applied to freeze CNY132 million (USD20.4 million) of deposits held by Evergrande and its subsidiary Yixing Hengyu Real Estate or to seize the equivalent in property, the Wuxi Intermediate People’s Court said today.

The loans in question mature on March 27 next year, Evergrande responded. It will take the bank to court for abusing the legal process of seizing assets prior to a lawsuit, which allows a petitioner to ask a court to order the seizing of assets in emergency situations before a lawsuit is actually filed.

As the news sank in, subsidiary China Evergrande New Energy Vehicle Group [HKG:0708] saw 19.1 percent wiped off its stock price today to finish at HKD16.10 (USD2.50). Hengten Networks Group’s shares [HKG:0136] lost 11.8 percent and Evergrande Property Services Group [HKG:6666] dropped 13.4 percent.

The bonds fared little better. 15 Evergrande 03 closed down 12.8 percent at CNY68.90 (USD10.6), 19 Evergrande 01 sank 11.5 percent to CNY68.90, 19 Evergrande 02 tumbled 11.4 percent to CNY71.90, 20 Evergrande 01 fell 8.6 percent to CNY78.9 and 20 Evergrande 02 closed down 9.8 percent at CNY73.

Editor: Kim Taylor