Chinese property giant Evergrande Group (恆大集團), the world’s most indebted developer, was given a final chance to get what could be China’s biggest-ever restructuring back on track, as a Hong Kong court pushed back a winding-up hearing.
Hong Kong High Court Judge Linda Chan (陳靜芬) adjourned the proceedings until Saturday, the latest in a series of delays since they began last year.
“This is really the last adjournment,” Chan said.
Photo: AP
Evergrande must have a concrete restructuring proposal by the next hearing, or the court is “very likely” to issue a winding-up order, she said.
Evergrande’s saga has added more uncertainty to China’s property debt crisis as it heads into its fourth year amid record defaults.
The problems began in 2020 when authorities laid out “three red lines,” which set leverage benchmarks for builders. By the end of 2021, Evergrande had defaulted.
In March, the company laid out details of its planned restructuring that called for offshore creditors to swap debt for new securities.
The fate of Evergrande, with about 2.39 trillion yuan (US$327 billion) in liabilities, and even bigger peer Country Garden Holdings Co (碧桂園) — deemed to have defaulted for the first time in recent days — is of broader significance to an economy where the property market and related industries account for about 20 percent of China’s GDP.
Evergrande’s reassessment of its proposals prompted the ad-hoc group of creditors — who hold more than US$6 billion of the builder’s nearly US$19 billion of offshore notes — to say that they were “left in the dark.”
“The company really has its last chance now to put forward a viable proposal that’s acceptable to my clients, and we hope the company understands the very clear message that was given from the judge: that this is the last chance,” said Neil McDonald, a partner at law firm Kirkland & Ellis LLP and legal adviser to the ad-hoc group.
The liquidation hearings stemmed from a wind-up lawsuit filed last year by a creditor, Top Shine Global Limited of Intershore Consult (Samoa) Ltd, which was a strategic investor in Evergrande’s online sales platform.
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