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China's Evergrande ordered to liquidate

Evergrande has over US$300 billion in debt, 1,300 'unfinished' projects

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Peeling logo of Evergrande Oasis pictured outside unfinished construction site in Luoyang, China Sept. 16, 2021. (Reuters photo)

Peeling logo of Evergrande Oasis pictured outside unfinished construction site in Luoyang, China Sept. 16, 2021. (Reuters photo)

TAIPEI (Taiwan News) — Evergrande Group, the world's most indebted property developer, was issued a compulsory liquidation order by a Hong Kong High Court on Monday morning (Jan. 29).

Hong Kong's TVB News reported that the court's order marks the largest real estate developer liquidation case in history. Three listed companies under the Evergrande Group suspended trading on the Hong Kong Stock Exchange in the morning.

The firm, which has more than US$300 billion in total liabilities, had its liquidation hearing postponed seven times. In this instance, the judge said Evergrande's restructuring plan lacked progress and its assets were insufficient to cover its debts.

Evergrande Group CEO Shawn Siu (肖恩) was cited by Sina Finance as saying the group will take all legal and compliant measures to steadily promote normal business operations under the premise of safeguarding the legitimate rights and interests of domestic and foreign creditors. Siu said the company will communicate with the liquidators in relevant procedures per the law, promote debt resolution in line with international conventions and market rules, and steadily advance key tasks such as ensuring the handover of properties.

TVB News cited an accounting professional involved in corporate liquidation as stating that the progress of the company's liquidation process will depend on factors, such as the liquidity of the assets and whether it involves the laws of other regions.

Vice Chair at Deloitte China Derek Lai (黎嘉恩) was quoted by the news agency as saying:

"Usually liquidation cases cannot be completed in two or three years. As for how long the entire liquidation process will take, it depends on the complexity of the case. Some cases can take seven or eight years, or even longer. If the company's assets cannot be liquidated immediately, there might be a waiting period. For example, especially if the assets are in the Mainland, it will take some time for the liquidators to gain control, so it won't happen very quickly."

Most of Evergrande's assets are in China, and the market is concerned about whether the liquidation order of the Hong Kong court can be successfully implemented in China.

In addition, it is estimated that Evergrande has more than 1,300 "unfinished" projects in China, involving 1.62 million units of unfinished commercial housing across the country, according to Sina Finance. Evergrande first defaulted on offshore debt in December 2021 and June 2022, and creditors applied to the Hong Kong court for the firm's liquidation.