A closely held Chinese real estate developer with 3.5 billionyuan (US$566.6 million) of debt has collapsed and its largestshareholder was detained, said government officials familiar withthe matter.

Zhejiang Xingrun Real Estate Co. doesn't have enough cash torepay creditors that include more than 15 banks, with ChinaConstruction Bank Corp. (CCB) holding more than 1 billion yuan ofits debt, according to the officials, who asked not to be namedbecause they weren't authorized to discuss the matter. Thecompany's majority shareholder and his son, its legalrepresentative, have been detained and face charges of illegalfundraising, the officials said.

The collapse of the company, based in the eastern town ofFenghua, adds to concern of strains in the nation's real estatesector and comes less than two weeks after the first bond defaultby 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. securitiesfirm was rescued in 2008, Bank of America Corp. said March 5.