On Monday morning, the Hong Kong Stock Exchange suspended the shares of the giant Chinese real estate developer China Evergrande Group, as well as the shares of its subsidiaries, Evergrande New Energy Vehicle and Evergrande Property Services.
BREAKING: A Hong Kong court has ruled that Evergrande, China's largest real estate developer, must be liquidated.
— The Kobeissi Letter (@KobeissiLetter) January 29, 2024
The stock is now down another 20% today on the news and trading has been halted.
Evergrande is now considered the most indebted property developer in the world.… pic.twitter.com/2ixwMwgB2o
This came after the Hong Kong Court issued a ruling requiring the liquidation of Evergrande Group. A temporary liquidation committee will be appointed and then an official liquidation committee to take over the reins and prepare to sell Evergrande’s assets to pay off its debts. However, those responsible for the liquidation will be able to propose a new debt restructuring plan to external creditors.
The Wall Street Journal reported in a report early this morning that Evergrande faces the imminent risk of liquidation after talks with its external creditors failed to reach an agreement on restructuring. The newspaper’s sources reported that the creditors were supporting the liquidation plan in today’s court session before the decision was issued. .
It should be noted that Evergrande defaulted for the first time in fulfilling its financial obligations in 2021, and this came in the wake of a campaign launched by the Chinese government on lending to real estate development companies in an attempt to calm the real estate bubble approximately a year ago, and the company subsequently continued to default on successive payments of... Its debts until the end of last year.
Wall Street Journal sources reported that creditors in court felt that although selling Evergrande's assets at a low price would not be a supportive option for the remaining Chinese assets, it may be the best move for Evergrande at this stage.
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