On January 29, a court in the Hong Kong Special Administrative Region (China) ruled that real estate group China Evergrande must liquidate its assets to repay debts. The court will hold another hearing on the same day, which could lead to the appointment of a liquidator for Evergrande.
Court-appointed liquidators will manage the company and sell its assets to pay off its debts. Once the process is complete, China's second-largest real estate company will cease to exist, CNN reported.
Evergrande’s shares, listed on the Hong Kong Stock Exchange, went into free fall immediately after the court’s ruling, with trading halted at 10:18 a.m. on January 29 after falling 20 percent. Evergrande’s subsidiaries, including Evergrande Property Services and Evergrande New Energy Vehicle Group, also called for a trading halt to stem the free fall.
Evergrande has assets worth about $240 billion, but it has debts of more than $300 billion. In 2021, Evergrande became the world's most indebted real estate company, and its default became a classic case of the crisis in China's real estate market, raising concerns about the contagion effect on the real estate sector both at home and abroad.
In 2023, creditors filed a lawsuit against Evergrande in Hong Kong, a case that dragged on as the parties tried to reach a settlement and Evergrande prepared a debt restructuring plan. By the end of June 2023, Evergrande’s debt was estimated to have reached $328 billion. The Shenzhen-based developer filed for bankruptcy in New York in 2023.
At the trial on the morning of January 29, Judge Linda Chan stated that Evergrande had failed to present a reasonable restructuring plan, despite the trial being postponed for several months. Previously, at the trial in December 2023, the judge gave Evergrande two more months to present a plan to repay its debt to foreign investors.
CHI HANH
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