(Yicai Global) Nov. 17 -- Chinese long-term rental platform Danke Apartment, which is enmeshed in rumors of ‘[management] absconding’ and looming bankruptcy has reportedly defaulted on employees’ wages, indicating that it will take time at least for this New York-listed firm to extricate itself from a deep financial hole dug for it by Covid-19.

Danke, which is operated by Beijing-based Phoenix Tree Holdings, usually pays wages on the 10th of each month, but these disbursements have still not been forthcoming to date. No employees have received pay yet this month and the specific date on which they will is still unknown, The Paper reported today.

Someone on social media reported yesterday that Danke may seek refuge in bankruptcy, to which the firm’s public relations department replied that all is normal with the company at present and claims of its controllers fleeing or filing for bankruptcy are hogwash. The company has indeed experienced financial difficulties, but is actively dealing with these, the PR team said. Long-term apartment rental is an emerging sector that requires support and understanding from all of society, it added.

Danke [NYSE:DNK] closed 9.27 percent down at USD1.37 yesterday.

Formed in 2015, the company is an asset management and residential service platform that has penetrated 13 cities across China, with 419,000 apartments in its portfolio, a 46.8 percent increase over the same time last year.

Money Trap

It runs 207,000 of these units in Beijing, Shanghai and Shenzhen combined, while the cumulative total is 212,000 for all other Chinese cities. Danke listed on the New York Stock Exchange on Jan. 17, the second domestic long-term rental apartment brand to go public in the US after rival Q&K International Group, operator of the Qingke platform [NASDAQ:QK], listed one year ago

The sudden outbreak of the coronavirus this year tipped Danke into a cashflow tarpit. It sought a one-month rent-free period on the grounds of the pandemic, and subsequently failed to pay its landlords three months’ rent. The news lit a fuse that drew hordes of these homeowners to assert their rights.

Danke then announced a personnel shakeup. Its board named Cui Yan, co-founder, director and president, after interim Chief Executive Officer Gao Jing, co-founder, director and CEO, became the target of a local government investigation, per the announcement.

“Gao Jing's investigation is related to a personal business investment he has previously participated in and personal issues and has nothing to do with Danke,” was the company’s disclaimer at the time.

Editor: Ben Armour, Xiao Yi