Dr. Marco Metzler
Managing Founder at Dr Metzler Rating Consulting
23h
Insolvency petition on Evergrande will be submitted soon, bankcruptcy is a matter of days
Michael Ewy, managing director of DMSA Deutsche MarktScreening Agentur GmbH , and I are currently in the Cayman Islands in preparation of our bankcruptcy proceedings against Evergrande Group which is registred as a company in the Cayman islands.
We had some meetings with laywers on the island since Monday and have given yesterday a mandate to a law firm to file the bankcruptcy proceedings against Evergrande. We will submit the petition to court in the coming days.
Once the insolvency petition has been filed and accepted by the court, an insolvency administrator will begin winding up the group and liquidate assets for investors and creditors. Meanwhile, the share and bond prices will fall to near zero and the fire sales starting from filing date the petition can be reversed later.
The recovery analysis of Fitch Ratings, my former employer and one of the big 3 rating agencies, assumes that Evergrande would be liquidated with a recovery rate of only 0 - 10 %.
An Evergrande bankruptcy is likely to worsen economic problems in China and the world.
Due to the failure of Evergrande being able to pay its creditors, devastating consequences for the global economy and the banking system could result. Supply chains could be put under even greater strain than they already are today. This, in turn, would then inevitably lead to galloping inflation in the USA and Europe and other countries.
It even has the potential to lead to extreme distortions of the global financial system - with bankruptcies of players that are still considered rock solid today. Triggered by a Chinese financial virus called Evergrande, the world may face a "Great Reset" - the final meltdown of the current global financial system. However after the old financial system broke down we have to regenerate a new economic system which is build on trust and honor and in balance with the nature and the universe. We need now to team up bringing all the truth to the public as we see the old economic system falling. There will be a great opportunity after the "Great Reset" to rebuild a better world. This should be everybody`s mission now.
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