China Evergrande Ordered To Liquidate In Landmark Moment For Crisis-hit Sector

• A Hong Kong court on Monday ordered the liquidation of property giant China Evergrande Group, with over US$300Bn in total liabilities, dealing a fresh blow to confidence in the country's fragile property market as policymakers step up efforts to contain a deepening crisis. This deal follows Evergrande's inability to offer a concrete restructuring plan more than two years after defaulting on its offshore debt and following several court hearings.
• Evergrande, which has $240Bn of assets, sent a struggling property sector into a tailspin and dealt a blow to the economy when it defaulted on its debt in 2021. The liquidation ruling creates further uncertainty for China's already fragile capital and property markets.
• Justice Chan appointed Alvarez & Marsal as the liquidator, emphasizing the need for a restructuring plan. This move raises questions about how Chinese authorities will treat foreign creditors and adds complexity to the process, especially with Evergrande's chairman under investigation for suspected crimes.
• Evergrande's shares plummeted to 20%, prompting a halt in trading for its listed subsidiaries. The decision's repercussions extend beyond financial markets, affecting Evergrande's daily operations, property management, and electric vehicle units. The ruling's potential effects on creditors, shareholders, and the broader Chinese economy are also highlighted.

(Source: Reuters)