The Hong Kong High Court has decided to liquidate Evergrande, a Chinese real estate development company that has been criticized for its astronomical insolvency. With the Chinese government’s real estate restructuring expected to speed up, attention is focused on whether the market reform will be able to make a soft landing and minimize impact.
Reuters reported on the 29th that the Hong Kong High Court approved creditors’ petition to liquidate Evergrande, the world’s most indebted real estate developer, in connection with Evergrande’s liquidation claim hearing, which began in 2022.
Evergrande was China’s leading real estate conglomerate, but it fell into a liquidity crisis due to its enormous debt and declared default at the end of 2021. In June 2022, Top Shine Global, a major investor in Evergrande, filed a liquidation lawsuit against Evergrande for its default of HK$862.5 million, and the possibility of liquidation began to be mentioned in earnest.
Evergrande Group’s total debt, which was recently compiled, was worth about $300 billion and its assets were about $240 billion.
Initially, the Evergrande liquidation lawsuit was regarded as a problem of Chinese real estate giant Evergrande’s insolvency. However, the insolvency of Chinese real estate companies erupted one after another last year, with the No. 1 private real estate company Viguyuyuan declaring default. As a result, the Evergrande crisis is said to have triggered China’s property crisis. Hengda Group Chairman Xu Jain was detained and other measures were taken in September last year.
The Hong Kong court originally planned to hold a final hearing on Evergrande on Oct. 30 last year, but delayed the hearing to Dec. 4 due to the gravity of the case and the Evergrande’s submission of a rehabilitation plan. Since then, the court has delayed the hearing once again, judging that it would be helpful for Evergrande and its creditors to hold restructuring negotiations in person to resolve the situation. However, judging that the possibility of rehabilitation is not high, the court reportedly decided to issue a final liquidation order on Dec. 29
