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Court Orders Liquidation of Evergrande

Court Orders Liquidation of Evergrande. The liquidation order by a Hong Kong court of China Evergrande Group marks a new chapter in the property crisis in China. The court led by Judge Linda Chan decided that the Chinese housing development company would then be managed by a liquidation team to resolve the debt pile. Evergrande is said to have debt equivalent to 2.39 trillion yuan (US$333 billion).

Following the news of the bankruptcy determination, the stock exchange authority has stopped trading in Evergrande shares. Before the shutdown, the company’s share price plunged 21%. As a result, Evergrande’s capitalization at the time of the trading halt was only HK$2.15 billion (US$275 million). Far below the debt value.

The largest property company in China in the last decade based on sales was first reported as having failed to pay dollar bonds in December 2021. A request for liquidation was then submitted by one of its main investors in June 2022, namely Top Shine Global Limited from Intershore Consult (Samoa) Ltd.

Since defaulting in 2021, Evergrande has proposed several restructuring plans. However, the process experienced various obstacles. It canceled its creditors’ meeting at the last minute at the end of September 2023, saying the latest plans required a reassessment.

Court Orders Liquidation of Evergrande. The company then proposed its latest restructuring plan in January and aims to present a new term sheet next March. But those efforts failed to give Evergrande more room to breathe.

Even with a winding up order, the liquidator is likely to face a more complicated process. This is because most of the Evergrande projects are operated by local units, which may be difficult for foreign liquidators to seize. And construction work, housing provision and other activities in mainland China will likely continue as long as the liquidation process takes place.

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