The Supreme Court of Hong Kong issued on January 29 an order to liquidate China Evergrande Group, a real estate conglomerate based in the Chinese mainland city of Shenzhen, Guangdong Province and registered in the Cayman Islands.
Judge Linda Chan said she based the order on Evergrande’s failure to present a convincing restructuring plan for repayment of about 300 billion yuan (US$41.7b) in matured debt. According to Evergrande’s financial report, by the end of 2022, the conglomerate’s debts were about 365.3 billion (US$50.8b) yuan more than its total assets.
A provisional liquidator and an official liquidator will be appointed to manage and sell Evergrande’s assets to repay the debts. In the meantime, work will continue on its huge slate of unfinished developments, many of which have been paid for by individual purchasers.
The order caused stocks in the Hong Kong-listed Evergrande to plummet by over 20 percent before trading was halted.
Analysts said Evergrande’s rapid development was its ultimate downfall as it became hugely overextended. It is a precarious time for China’s real estate industry, and many fear that Evergrande may never be able to finish many of its construction projects.
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