tyb
>>20321573 lb
>Evergrande liquidated
Is this a bad thing?
https://www.nytimes.com/2024/01/28/business/china-evergrande.html
Months after China Evergrande ran out of cash and defaulted in 2021, investors around the world scooped up the property developer’s discounted I.O.U.’s, betting that the Chinese government would eventually step in to bail it out.
On Monday it became clear just how misguided that bet was. After two years in limbo, Evergrande was ordered by a court in Hong Kong to liquidate, a move that will set off a race by lawyers to find and grab anything belonging to Evergrande that can be sold.
The order is also likely to send shock waves through financial markets that are already skittish about China’s economy.
Evergrande is a real estate developer with more than $300 billion in debt, sitting in the middle of the world’s biggest housing crisis. There isn’t much left in its sprawling empire that is worth much. And even those assets may be off limits because property in China has become intertwined with politics.
Evergrande, as well as other developers, overbuilt and over promised, taking money for apartments that had not been built and leaving hundreds of thousands of home buyers waiting on their apartments. Now that dozens of these companies have defaulted, the government is frantically trying to force them to finish the apartments, putting everyone in a difficult position because contractors and builders have not been paid for years.
What happens next in the unwinding of Evergrande will test the belief long held by foreign investors that China will treat them fairly. The outcome could help spur or further tamp down the flow of money into Chinese markets when global confidence in China is already shaken.
“People will be watching closely to see whether creditor rights are being respected,” said Dan Anderson, a partner and restructuring specialist at the law firm Freshfields Bruckhaus Deringer. “Whether they are respected will have long term implications for investment into China.”
China needs investments from foreign investors now more than ever in its recent history.
Financial markets in mainland China and Hong Kong, which has for years been an entry point for foreign investment, have received such a blow that officials are scrambling to find policy measures like a stock market rescue fund to shore up confidence. And China’s housing market shows little signs of returning to the boom days, in part because Beijing wants to redirect economic growth from construction and investment.
Rising diplomatic tensions between the United States and China, which has led to large outflows of foreign money from China, is not helping.
Investors are looking to the resolution of the Evergrande case to see how China will handle disputes over its deadbeat companies, of which there are dozens in the property sector alone.
Specifically, they will want to see whether the people who are now tasked with carrying out the liquidation will be recognized by a court in mainland China, something that historically has not happened.
Under a mutual agreement signed in 2021 between Hong Kong and Beijing, a mainland Chinese court would recognize the Hong Kong court-appointed liquidator to allow creditors to take control of Evergrande assets in mainland China. But so far only one of five such requests to local Chinese courts has been granted.
Monday’s decision, which was handed down by Judge Linda Chan, had already been delayed multiple times over the past two years as creditors and other parties agreed to adjourn to give the company more time to reach an agreement with creditors on how much they might be paid.
As recently as last summer, it seemed as though Evergrande’s management team and some of its offshore creditors that had lent the company money in U.S. dollars in Hong Kong were closing in on a deal. The talks hit the brakes in September when several high level executives were arrested and, eventually, the founder and chairman, Hui Ka Yan, was detained by police.
The court’s decision on Monday was “a big bang,” Mr. Anderson said, that will “lead to something of a whimper as liquidators chase assets.”
The post Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles appeared first on New York Times.
https://dnyuz.com/2024/01/28/evergrande-will-be-dismantled-a-big-bang-end-to-years-of-stumbles/
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here's another linky
Second story:
Hong Kong court orders Chinese property developer Evergrande to liquidate
Once China‘s biggest developer, Evergrande has reported more than $300 billion in liabilities and its troubles have become a symbol of a years-long property crisis that has dealt a massive blow to the country’s economy.
A creditor in 2022 filed a winding-up petition in Hong Kong against China Evergrande Group – which would begin the process of liquidation – but the case has dragged on while parties tried to broker a deal.
High Court judge Linda Chan on Monday called for the liquidation of the firm given “the obvious lack of the progress on the part of the company in putting forward a viable restructuring proposal and the insolvency of the company”.
“I consider that it is appropriate for the court to make a winding-up order against the company and I so order,” Chan said.
She added that the court at the previous hearing in December “made it very clear it expected to see a fully formulated and viable proposal”.
Stocks tumble, trading suspended
Shares in Evergrande plunged 20.87% to HK$0.16 in Hong Kong following the news, before the stock exchange halted trading at 10:19 am.
Trading was also halted in Evergrande’s electric vehicle subsidiary.
Speaking after the morning session of the court adjourned, a lawyer representing an ad-hoc group of creditors told reporters that Evergrande had “failed to engage with us”.
“There has been a history of last-minute engagement which has gone nowhere,” said lawyer Fergus Saurin. “The company has itself to blame for being wound up.”
Chan is expected to hand down her detailed reasons for the winding up order in the afternoon and will handle the matter of appointing a liquidator.
The demise of Evergrande, which first defaulted on a debt payment in 2021 and declared bankruptcy in the United States this year, has been closely watched as it was once a pillar of China’s economy.
Debt deemed ‘risk’ to China’s financial system
China’s construction and property sector once accounted for around a quarter of its GDP.
But Chinese President Xi Jinping deemed the debt accrued by Evergrande and other property firms an unacceptable risk for China’s financial system and overall economic health.
Authorities have gradually tightened developers’ access to credit since 2020, and a wave of defaults has followed.
By the end of June, Evergrande estimated it had debts of $328 billion.
(AFP)
The post Hong Kong court orders Chinese property developer Evergrande to liquidate appeared first on France 24.