Evergrande Group’s shares tumbled over 20 percent on Monday after a Hong Kong court issued a winding-up order against the embattled Chinese real estate developer, according to multiple reports.
In her ruling, Judge Linda Chan deemed it appropriate for the court to order Evergrande to liquidate, citing the “lack of progress on the part of the company in putting forward a viable restructuring proposal.”
“It is time for the court to say enough is enough,” she said. The judge was expected to provide more reasons for the liquidation order during a separate court session Monday afternoon.
With the company’s 2.39 trillion yuan ($333 billion) in liabilities, its market value plummeted to just HK$2.15 billion ($275 million) on Monday morning, with shares trading at $0.02.
Trading in shares of China Evergrande and its listed subsidiaries, China Evergrande New Energy Vehicle Group and Evergrande Property Services, have since been halted.
While Evergrande Executive Director Shawn Siu expressed regret over the court’s decision, he said the order will only affect the Hong Kong-listed China Evergrande unit.
Mr. Siu told Chinese news outlet 21Jingji that Evergrande remains committed to maintaining its operations, with domestic and overseas units operating as independent legal entities.
“If affected, we will still make every effort to ensure the smooth advancement of risk resolution and asset disposal, and we will still make every effort to advance all work fairly and in accordance with the law,” he said.
Evergrande was granted an adjournment by a Hong Kong court on Dec. 4, 2023, after its lawyers indicated that it was planning to “refine” its debt restructuring proposal. Its lawyers also said that no creditors were “actively seeking” the liquidation of the developer.
However, Fergus Saurin, a lawyer representing an ad hoc group of creditors, said on Monday that he was not surprised by the court’s decision.
“The company has failed to engage with us. There has been a history of last-minute engagement which has gone nowhere,” Mr. Saurin said.
Mr. Saurin said that his team worked in good faith during the negotiations, adding that Evergrande “only has itself to blame for being wound up.”
Evergrande is the world’s most indebted firm, with a $340 billion debt. The company is at the center of an ongoing property crisis that experts say hurts China’s economic growth.
In July, it posted combined losses of $81 billion for 2021 and 2022.
In August, the troubled real estate giant filed Chapter 15 bankruptcy protection proceedings in New York as it seeks to shield itself from potential legal actions by creditors seeking to sue the company or seize assets in the United States.
It had to sell 28 percent of its stake in its promising electric vehicle (EV) unit, Evergrande New Energy Vehicle Group, to Dubai-based startup NWTN, which would invest $500 million and have a majority on the EV maker’s board.
Last year, its Hong Kong headquarters building, valued at $1.2 billion, was seized by a lender after the company failed to sell its office to pay its debts.
Aaron Pan and the Associated Press contributed to this report.
From The Epoch Times
