A Hong Kong court will convene a hearing Monday on troubled Chinese property developer Evergrande’s plans for restructuring its greater than $300 billion in debts and staving off liquidation.
The corporate, the world’s most indebted property developer, bumped into trouble when Chinese regulators cracked down on excessive borrowing in the true estate sector.
Last month, the corporate said Chinese police were investigating Evergrande’s chairman, Hui Ka Yan, for unspecified suspected crimes in the most recent obstacle to the corporate’s efforts to resolve its financial woes.
The Hong Kong High Court has postponed the hearing over Evergrande’s potential liquidation several times.
Judge Linda Chan said in October that Monday’s hearing could be the last before a choice is handed down.
Evergrande could possibly be ordered to liquidate if the plan is rejected by its creditors.
Evergrande could possibly be ordered to liquidate if the plan is rejected by its creditors. REUTERS
In September, Evergrande abandoned its initial debt restructuring plan after authorities banned it from issuing recent dollar bonds, which was a key a part of its plan.
The corporate first defaulted on its financial obligations in 2021, just over a yr after Beijing clamped down on lending to property developers in an effort to chill a property bubble.
Evergrande is one in every of the most important developers to have defaulted on its debts.
But others including Country Garden, China’s largest real estate developer, have also run into trouble, their predicaments rippling through financial systems in and out of doors China.
Evergrande’s chairman, Hui Ka Yan, was investigated by Chinese police last month for unspecified suspected crimes. REUTERS
The fallout from the property crisis has also affected China’s shadow banking industry — institutions which offer financial services much like banks but which operate outside of banking regulations.
Police are investigating Zhongzhi Enterprise Group, a significant shadow bank in China that has lent billions in yuan (dollars) to property developers, after it said it was insolvent with as much as $64 billion in liabilities.
Real estate drove China’s economic boom, but developers borrowed heavily as they turned cities into forests of apartment and office towers.
That has helped to push total corporate, government and household debt to the equivalent of greater than 300% of annual economic output, unusually high for a middle-income country.
To forestall troubles spilling into the economy from the property sector, Chinese regulators reportedly have drafted a listing of fifty developers eligible for financing support, amongst other measures meant to prop up the industry.
