Specifically, "lord" Evergrande faces a deadline early next week to submit a specific debt restructuring proposal to foreign creditors.
However, according to Reuters , creditors are unlikely to accept Evergrande's new proposal due to low prospects for recovery in the real estate sector as well as great concerns about the future of the market.
If a liquidation order is issued, a court-appointed liquidator will take control and prepare to sell the investor’s assets to repay the debt. The liquidator may propose a new debt restructuring plan to bondholders if the company has sufficient assets.
According to debt restructuring experts, the process can face many major challenges.
Evergrande faces a deadline early next week to present a specific debt restructuring proposal to foreign creditors (Photo: Reuters).
It is unclear at this point whether Evergrande shares are at risk of being suspended from trading following the liquidation order. However, the Hong Kong Stock Exchange requires companies to demonstrate that their business structure and collateral value are sufficient to qualify for listing.
China Oceanwide Holdings previously suspended its shares in September, shortly after a Bermuda (UK) court issued a liquidation order.
The dissolution of the $240 billion property developer would send shockwaves through the market. Given the sheer size of Evergrande’s projects and debt, the process would have a major impact on the market.
For now, pushing through the completion of unfinished projects will be a top priority for the company and the Chinese real estate industry, although the liquidation of the real estate giant may make homebuyers nervous about the growth of private developers.
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