A closely held Chinese real estate developer with 3.5 billion yuan (US$566.6 million) of debt has collapsed and its largest shareholder was detained, said government officials familiar with the matter.

Zhejiang Xingrun Real Estate Co. doesn't have enough cash to repay creditors that include more than 15 banks, with China Construction Bank Corp. (CCB) holding more than 1 billion yuan of its debt, according to the officials, who asked not to be named because they weren't authorized to discuss the matter. The company's majority shareholder and his son, its legal representative, have been detained and face charges of illegal fundraising, the officials said.

The collapse of the company, based in the eastern town of Fenghua, adds to concern of strains in the nation's real estate sector and comes less than two weeks after the first bond default by a Chinese company. Shanghai Chaori Solar Energy Science & Technology Co.'s inability to repay its debt may become China's own “Bear Stearns moment,” prompting investors to reassess credit risks as they did after the U.S. securities firm was rescued in 2008, Bank of America Corp. said March 5.