China: The Evergrande Group, China’s largest real estate company, has been ordered to liquidate, which is expected to further erode confidence in the second-biggest economy in the world.
The decision was made on Monday by a Hong Kong court after the business was unable to persuade the judge that it had a feasible plan to restructure approximately $300 billion in debt.
“It would be a situation where the court says enough is enough,” Judge Linda Chan said. I consider that it is appropriate for the court to make a winding up order against the company, and I so order,” Judge Linda Chan said.
The decision comes after 18 months of court battles, beginning in 2022 when creditor Top Shine filed a petition to wind up the developer in an attempt to recover its losses.
The developer that has the highest debt in the world, Evergrande, was given a short reprieve in December on the grounds that it required more time to perfect its restructuring plan.
The court “made it very clear it expected to see a fully formulated and viable proposal,” according to Chan, who stated this in December.
Jose-Antonio Maurellet, the attorney for Evergrande, defended the updated plan and refuted claims that the developer had behaved dishonestly.
After Beijing started to clamp down on excessive borrowing for real estate, Evergrande defaulted on repayments to foreign investors in 2021, sending shockwaves through China’s property sector, which makes up an estimated 15–30 percent of the country’s GDP.
According to credit rating company Standard and Poor’s, over 50 Chinese real estate developers have fallen behind on their payments or skipped them over the previous three years.
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