Aerial photo shows a Country Garden residential area in Nanjing, east China's Jiangsu province, February 5, 2024. Future release via Getty Images
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China's Country Garden Holdings said on Wednesday it had received a liquidation petition filed by one of its creditors, adding to concerns about the country's troubled real estate sector.
The troubled real estate developer said in a regulatory filing that it had received a “resolution application” dated February 27 filed by creditor Ever Credit Limited.
The petition was filed over non-payment of a loan worth 1.6 billion Hong Kong dollars (US$204.4 million).
Country Garden said it would “vigorously” oppose the petition and take legal action to achieve this. A court hearing will take place on May 17.
The company's Hong Kong-listed shares fell more than 12%, far more than the 0.27% decline in the broader Hang Seng index.
Country Garden said it intends to “communicate proactively” and work with its offshore creditors on its restructuring plan. It noted that it did not expect the petition to have a material impact on the offshore restructuring process.
The debt-burdened property developer's update comes at a time when authorities are struggling to boost confidence in the property market.
The International Monetary Fund said earlier this month that demand for new housing in China is expected to fall by about 50% over the next decade.
In late January, real estate giant China Evergrande was ordered into liquidation by a Hong Kong court, reinforcing concerns about China's struggling real estate sector. Still, worries about spillover appear to have abated as Evergrande's problems appear to have been contained.
China's real estate sector has always been the foundation of the country's economy and accounts for a large part of the gross domestic product. The industry has grown rapidly in recent decades, fueled by debt. But these mountains of debt strained balance sheets and led to defaults by major developers.
Companies like Country Garden and Evergrande have struggled to repay their debts and are now in lengthy debt restructuring processes.