A Hong Kong court on Monday ordered the liquidation of the struggling Chinese real estate giant Evergrande after it failed to present a convincing restructuring plan, causing its shares to plummet on the Hong Kong stock market.
Evergrande was China’s largest real estate developer, but accumulated debts until it had liabilities of more than $300 billion, becoming a symbol of the years-long real estate crisis in the world’s second-largest economy.
“Considering]the obvious lack of progress on the part of the company in presenting a viable restructuring plan. […] I consider it appropriate for the court to make a judgment to wind up the company, and that is what I order,” said Justice Linda Chan.
The judge should present the details of her judgment in the afternoon and could appoint a liquidator for Evergrande.
Evergrande’s shares fell by more than 20% after the announcement of its liquidation on the Hong Kong Stock Exchange, which suspended trading of the stock.
“Exchanges in the securities of […] Evergrande Property Services Group Limited were suspended at 10:19 a.m. local time (2:19 a.m. GMT), said the Hong Kong Stock Exchange, which also suspended trading in its electric vehicle subsidiary Evergrande NEV.
A creditor filed a liquidation petition in a Hong Kong court against the developer last year, but proceedings dragged on as the parties tried to negotiate a deal.
The collapse of Evergrande, which defaulted on payments for the first time in 2021 and which was declared bankrupt in the United States, was closely followed by the Chinese authorities because the group was a pillar of the Chinese economy.
China’s construction and real estate sector accounted for about a quarter of China’s GDP, but Chinese President Xi Jinping said the debt accumulated by Evergrande and other real estate companies posed an unacceptable risk to China’s financial system and the economy. overall economic health.
The authorities have gradually restricted developers’ access to credit since 2020, triggering a wave of payment defaults.
At the end of June, Evergrande estimated its debts at $328 billion.