2024-01-29 03:00:31
Failing to have presented a convincing restructuring plan, the Chinese real estate giant Evergrande was put into liquidation on Monday. Trading of the stock was suspended on the Hong Kong Stock Exchange.
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Symbol of the setbacks of the real estate sector in China, the Evergrande group will be liquidated. A Hong Kong court made the decision on Monday, January 29, following the failure of the real estate giant to present a convincing restructuring plan.
Evergrande was China’s largest developer, but accumulated debts until it had liabilities of more than $300 billion.
“(Considering) the obvious lack of progress on the part of the company in presenting a viable restructuring plan. (…) I consider it appropriate for the court to render a judgment of liquidation of the company, and this is what I order,” declared judge Linda Chan, who should present the details of her judgment in the followingnoon and might appoint a liquidator for Evergrande.
However, it is not immediately clear how a decision taken in the semi-autonomous Chinese region of Hong Kong can materialize in mainland China, where the group is based.
“Today’s court decision is contrary to our original intention (…). It is extremely regrettable,” Evergrande CEO Shawn Siu told Chinese business media 21st Century Business Herald.
Read alsoEvergrande: Xu Jiayin or the journey of an overly spoiled Chinese real estate tycoon
After the morning session adjourned, Fergus Saurin, a lawyer representing a group of creditors, told reporters that Evergrande had not “engaged in dialogue” with them. “There were attempts at dialogue at the last minute which led to nothing,” he said. “The company only has itself to blame for being liquidated.”
The shares of the Chinese real estate giant fell by more than 20% following the announcement of its liquidation. The Hong Kong Stock Exchange suspended trading of the stock.
“Trading in the securities of (…) Evergrande Property Services Group Limited was suspended at 10:19 a.m. local time (2:19 a.m. GMT), indicated the financial center, which also suspended the listing of the subsidiary of Evergrande NEV electric vehicles.
Pillar of the Chinese economy
A creditor filed a liquidation petition in a Hong Kong court once morest the developer last year, but proceedings dragged on as the parties tried to negotiate a deal.
The collapse of Evergrande, which defaulted on payments for the first time in 2021 and which was declared bankrupt in the United States, was closely followed by the Chinese authorities because the group was a pillar of the Chinese economy.
China’s construction and real estate sector accounted for regarding a quarter of China’s GDP, but Chinese President Xi Jinping said the debt accumulated by Evergrande and other real estate companies posed an unacceptable risk to China’s financial system and the economy. overall economic health.
The authorities have gradually restricted developers’ access to credit since 2020, triggering a wave of payment defaults. At the end of June, Evergrande estimated its debts at $328 billion.
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