[1/4]The company logo is seen at the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China, 26 September 2021. Portal/Aly Song/File Photo Acquire License Rights
HONG KONG, Dec 4 (Portal) – A court hearing on a liquidation petition filed against China Evergrande Group (3333.HK) has been postponed until next month in a Hong Kong court, allowing more time to finalize a debt restructuring proposal in a key relief for the embattled developer.
The hearing on the petition has been adjourned to January 29, the court said in an unexpected move on Monday, after lawyers for Evergrande (3333.HK) requested an adjournment, saying no creditor was “actively seeking liquidation.” .
When Hong Kong Supreme Court Justice Linda Chan adjourned the hearing until Monday on October 29, she had said that the next hearing would be the last before a decision on Evergrande’s liquidation is made.
After Monday’s adjournment order, Evergrande shares recovered their losses from the previous day and rose more than 13%.
Evergrande, the world’s most indebted real estate developer with total liabilities of more than $300 billion, defaulted on its offshore debt in late 2021, becoming the poster child of a debt crisis that has since gripped China’s real estate sector.
Evergrande last week sought to draw up a revised restructuring plan to avoid a possible liquidation order.
After Monday’s adjournment, a representative from investment bank Moelis & Co, an adviser to a group of Evergrande’s offshore creditors, said they were surprised by the decision.
Creditors rejected the latest restructuring plan and would seek liquidation if conditions did not change, the adviser said.
Evergrande’s lawyer told the court that the developer expects to “refine” its restructuring proposal over the next five weeks. The judge ordered Evergrande to hold direct discussions with “relevant authorities” about the changed conditions.
The liquidation of Evergrande, which had assets of $240 billion at the end of June, would put even more pressure on the already struggling real estate sector, which accounts for a quarter of the world’s second-largest economy.
Evergrande’s debt woes have been a major concern for global investors at a time when the economy has struggled to stage a strong recovery from the pandemic as property sales slowed and hundreds of thousands of homes remained unfinished across the country.
Authorities have announced a series of measures to revive the real estate sector, which has been destabilized in recent years by the debt problems of giants such as Evergrande and Country Garden (2007.HK).
Evergrande has been working on a debt restructuring plan for almost two years. Their original plan was derailed in late September when it was confirmed that billionaire founder Hui Ka Yan was under investigation for alleged criminal activity.
The developer did not receive approval from Chinese regulators to issue new U.S. dollar bonds – a crucial part of the restructuring plan – and therefore did not hold a creditor vote on the plan.
Top Shine, an investor in Evergrande unit Fangchebao, filed the liquidation petition in June 2022 because it said Evergrande had reneged on an agreement to repurchase shares the investor had purchased in the unit.
Reporting by Clare Jim; Writing by Sumeet Chatterjee; Edited by Kim Coghill and Christopher Cushing
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