Hong Kong Justice ordered liquidation of indebted Chinese real estate giant this Monday Evergrande The company ruled in favor of its creditors after more than a year and a half of delays as it tried to agree on a restructuring plan for its overseas debts.
Local South China Morning Post newspaper reported that Evergrande, which has debts of nearly $330 billion, You can still appeal the court decision.
Linda Chan, the same judge who sentenced Evergrande and granted seven postponements so far (the last one in December, against all odds), will preside over the hearing at 14:30 local time (06:30). 30 GMT) to Appointing an interim judicial administrator for the company.
“The trial lasted a year and a half” The company has yet to submit a concrete restructuring proposal. “I think it’s time for the court to say enough is enough,” Chan said today.
South China Morning Post notes that according to Hong Kong settlement regulations: Provisional liquidators will now take control of the company’s management and manage its affairsIt involves negotiations with creditors regarding debt restructuring and control of assets, books and accounting records.
Will China recognize the order?
A few minutes after the news was published, Evergrande shares on the Hong Kong Stock Exchange fell more than 20%Its subsidiary for electric vehicles, which is traded on the same stock exchange, lost more than 18%.
The international press had pointed out that Evergrande’s last round of negotiations with its main creditors had failed and therefore these talks were continuing. had decided to support the liquidation petition submitted in mid-2022 A lawsuit was filed by a domestic investor for non-payment of approximately $110 million worth of share buybacks.
Last year, Evergrande, citing an analysis from Deloitte, claimed: In case of liquidation, the recovery rate of investors will be around 3.4%.
Some analysts have also raised the question of whether there is a hypothetical liquidation ordered by the Hong Kong Court of Justice. would be recognized in Chinese continentalWhere the group owns most of its assets.
“The market will pay attention to what buyers can do (…), in particular whether it will be recognized by any of the three courts established in the People’s Republic of China under the 2021 agreement on cooperation in cross-border insolvency cases between mainland China and Hong Kong,” says Lance Jiang, partner at Ashurst LLP, South China Quoted by Morning Post.
“Judicial administrators will have very limited enforcement authority over onshore assets If they (based in mainland China) don’t get that recognition,” the expert says.
long term crisis
Evergrande defaulted more than two years ago after suffering a liquidity crisis This was intervened by Chinese authorities due to Beijing’s restrictions on highly leveraged financing of developers.
China’s once-largest real estate developer has since He was trying to get rid of the beings Raise as much money as possible while negotiating a plan to restructure your debt.
Evergrande, which has accumulated almost $20 billion in outstanding offshore debt suspended voting on restructuring proposals several times: The last one was in September, when it found its sales were going worse than expected and announced that it could not continue issuing new debt through its main subsidiary in China.
Moreover, the group was dragged into a new crisis founder and chairman Xu Jiayin was placed under a form of house arrest due to “suspicions of illegal activities”.
It is estimated that Evergrande is not finished yet Construction and delivery of houses sold off-plan worth approximately 604 billion yuan ($84,098 million), and this is one of the non-financial factors that most concerns the Chinese Government due to its possible consequences on social stability, as real estate is one of the main investment vehicles for families in the country.
Total, Evergrande still has over 1,200 promotions in different states of progress.
One of the main reasons for the recent slowdown of the Chinese economy is precisely real estate crisisAccording to some analysts, its weight on national GDP is estimated at around 30% – when indirect factors are added.