Real Estate Developer China Evergrande Ordered By Hong Kong To Liquidate 

A Hong Kong court has ordered the world’s most heavily indebted real estate developer, China Evergrande, to undergo liquidation after the company failed to restructure the $300 billion it owed to banks and bondholders.

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A court in Hong Kong has ordered China Evergrande to undergo liquidation after the company failed to restructure the $300 billion debt it owed to banks and bondholders. China Evergrande is the world’s most indebted real estate developer, and its current debt is only fueling the rising debt burden in China. 

“It would be a situation where the court says enough is enough, [it’s appropriate for the court to order Evergrande to wind up its business given a] lack of progress on the part of the company putting forward a viable restructuring proposal” as well as Evergrande’s insolvency,” said Judge Linda Chan.

China Evergrande Group is one of the biggest developers in a list of ones that have collapsed since 2020. These various developers were under immense pressure to rein in surging debts, according to CBS News. According to court documents, Evergrande owes around $25.4 billion to foreign creditors.

“It is indisputable that the company is grossly insolvent and is unable to pay its debts.”

Evergrande’s chairman, Xu Jiayin, was detained in September by authorities for suspected illegal crimes as well. 

Around 90% of Evergrande’s business is in mainland China, it’s currently unclear how this liquidation will impact China’s overall financial system. Evergrande’s pending operations are also struggling to deliver housing that has been paid for but not given to the families that have put a bunch of their savings into their investments. 

Before Evergrande was suspended from trading, its Hong Kong-traded shares declined nearly 21%, according to reports. Fergus Saurin is a lawyer representing an ad hoc group of creditors and stated on Monday that he was not surprised by these recent updates involving Evergrande’s debt.

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“The company has failed to engage with us. There has been a history of last-minute engagement which has gone nowhere.”

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Saurin continued to state that his team is working in “good faith” during the negotiations. “Evergrande only has itself to blame for being wound up,” he stated. 

Judge Chan stated that Evergrande “has not demonstrated that there is any useful purpose for the court to adjourn the petition – there is no restructuring proposal, let alone a viable proposal which has the support of the requisite majorities of the creditors.”

Chan also stated that Evergrande has only put out “general ideas” regarding a restructuring proposal for their massive debt. She explained that creditors will be better protected if Evergrande is brought to court. 

Shawn Siu, Evergrande’s CEO, told 21Jungji, a Chinese news outlet, that they feel “the utmost regret” over the court’s liquidation order, but made sure to specify that the order itself only impacts the Hong Kong-listed China Evergrande unit. 

“If affected, we will still make every effort to ensure the smooth advancement of risk resolution and asset disposal, and we will still make every effort to advance all work fairly and in accordance with the law,” Siu said.