On January 29, a court in the Hong Kong Special Administrative Region (China) ruled that the real estate conglomerate China Evergrande must liquidate its assets to repay its debts. The court will hold another hearing on the same day, which could lead to the appointment of a liquidator for Evergrande.
According to CNN, court-appointed liquidators will manage the company and sell its assets to pay off debts. Once this process is complete, China's second-largest real estate company will cease to exist.
Immediately after the court's ruling, Evergrande's shares listed on the Hong Kong Stock Exchange plummeted, and trading was halted at 10:18 a.m. on January 29 (local time) after falling 20%. Evergrande's subsidiaries, including Evergrande Property Services and Evergrande New Energy Vehicle Group, also called for a trading halt to prevent further losses.
Evergrande currently has assets worth approximately $240 billion, but the conglomerate carries debts exceeding $300 billion. In 2021, Evergrande became the world's most indebted real estate company, and its default became a prime example of the crisis in the Chinese real estate market, raising concerns about contagion effects in the real estate sector both domestically and internationally.
In 2023, creditors filed a lawsuit against Evergrande in Hong Kong, a protracted case in which the parties attempted to reach an agreement and Evergrande prepared a debt restructuring plan. By the end of June 2023, Evergrande's debt was estimated to have reached $328 billion. The Shenzhen-based real estate developer filed for bankruptcy in New York in 2023.
At the court hearing on the morning of January 29, Judge Linda Chan stated that Evergrande had failed to present a reasonable restructuring plan, despite the trial being postponed for several months. Previously, in the December 2023 hearing, the judge had given Evergrande an additional two months to present a plan to repay its foreign investors.
CHI HANH
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