July 18, 2024

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Evergrande creditors make last push to avert liquidation order

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Evergrande’s international creditors are pressing for a last-minute agreement to avert a court order to liquidate the highly indebted Chinese property developer.

Investors in Evergrande’s debt have been talking to the company about various restructuring options in recent days, two people close to the talks said, aware that a formal liquidation — which could be ordered within hours — would be likely to mean lower recovery prospects for their investments.

The talks have taken on a renewed urgency since Hong Kong’s High Court is due on Monday to hear a petition from an Evergrande creditor, Top Shine Global, asking for the winding-up of the company that defaulted in 2021 with $300bn of liabilities.

Two people close to the last-ditch talks said creditors had been placing growing pressure on Top Shine to drop the lawsuit, a move that could enable restructuring talks involving debt to equity swaps to continue. Top Shine’s lawyer did not immediately comment on Sunday, and the company itself could not be reached for comment.

Evergrande has been at the heart of China’s property crisis and the indebted developer has encapsulated concern over the scale of problems in the sector, which once accounted for a quarter of the country’s economic growth.

Representatives for some of its creditors have previously said that liquidation could have a “catastrophic effect” on other developers in China, and on Chinese companies’ ability to raise money in international capital markets.

Since Evergrande’s default other developers have also run into problems as Chinese authorities have tried to rein in excessive leverage in the sector.

Hong Kong-listed Evergrande has been struggling to finalise a restructuring. Its plans were derailed in September when it failed to proceed with an offshore debt refinancing due to an unspecified regulatory…

2023-12-03 11:14:06

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