A court hearing on a liquidation petition filed against China Evergrande Group has been postponed to Jan. 29, giving the embattled property developer more time to finalize its debt restructuring plan.
This came as a surprise given that Hong Kong High Court Justice Linda Chan had said on Oct. 29 that the hearing would be the last before a decision was made on whether to liquidate Evergrande in the absence of a “concrete” restructuring plan.
However, during the court session on Dec. 4, the petitioner’s lawyer told the court that he had been “instructed not to present any argument in opposition to” the adjournment.
Justice Chan later ordered the petitioner to inform other creditors one week ahead of the next hearing should it decide to withdraw the petition, so those creditors can continue action if they wish.
Offers to Creditors
Under revised terms, the lawyer said, Evergrande is offering shares to creditors—17.8 percent of China Evergrande Group, 21.6 percent of Evergrande Property Services Group, and 28.5 percent of Evergrande New Energy Vehicle Group.It will also offer certificates, or the right to proceeds, from disposable assets. Those terms replace its proposal to issue equity-linked instruments backed by the three listed companies and new bonds in March.
Judge Chan said that Evergrande must engage in direct talks with Chinese authorities about its proposed restructuring terms and that it will need approval from all creditors before the next hearing happens.
Once China’s second-largest homebuilder by sales, Evergrande defaulted in late 2021 with some $300 billion of debt on its back.
The debt woes have been a major concern for global investors at a time when government stimulus has struggled to propel post-pandemic economic recovery, with property sales slowing and hundreds of thousands of homes left unfinished.
Eva Fu and Reuters contributed to this report.
