Authorities are reportedly investigating the finances of companies managed by Li Yan, a mining tycoon who at one time proposed to buy the now-defunct Hummer brand.

Li has reportedly not been seen for several days. His companies in southwestern China's Sichuan province are 10 billion yuan (US$1.6 billion) in debt and a source close to the matter says he may not repay all of it.

Li, also known as his Tibetan name of Suolang Duoji, controls companies including the Chengdu-based Sichuan Tengzhong Heavy Industrial Machinery Co. The company was set to buy the Hummer line of sports utility vehicles from General Motors in 2009 but the deal was nixed by the Chinese regulator.

Li also founded Chengdu-based Sichuan Huatong Investment Holding Co, on behalf of which company he is the major shareholder in Hong Kong-listed China Lumena New Materials Corp.

Trading in Lumena's shares was suspended on March 25 after short-seller Glaucus Research Group published a note alleging that Lumena's sales are 90% lower than its stock exchange filings.

Lumena Zhang Zhigang rejected the Glaucus report, an April 4 company statement said.

Chengdu authorities are concerned that the local financial system may face instability if Li's companies fail to pay back their debt, according to the source, who said that several billion yuan of the debt accumulated by Li's companies are bank loans.