Financial markets/economy

Evergrande, Hong Kong court orders liquidation

Posted by MoneyController on 29.01.2024

The Hong Kong property company Evergrande will have to go into liquidation. This is the decision of the Hong Kong court. But how did such a decision come about?

The decision to liquidate Evergrande and the stock market crash

There are two reasons. The first, and most well-known, is the current financial situation of Evergrande, which has been unable to repay its bonds on a debt of USD 300 billion. The second is that the debt restructuring plan has not convinced the Hong Kong court. Meanwhile, trading in Evergrande's shares has been halted after the stock plunged 20% on the stock exchange.

The possibility of appeal and the role of other Chinese courts

As Gianluca Modolo writes in La Repubblica, it is true that Evergrande will be able to appeal to the Court of Appeal, but in the meantime a liquidator has already been appointed. It is also true, Modolo continues, that the Hong Kong court's decision will have to be ratified by the other Chinese courts (Hong Kong has a legal system that is partly different from the rest of China).

Top Shine Global's liquidation petition

So why was this decision taken in Hong Kong? As we read in 'La Repubblica', the reason is that it was in Hong Kong that the liquidation petition was filed by the offshore creditor, Top Shine Global.

What will happen to Evergrande?

As we read in the 'Post', Evergrande's liquidation will also depend on the decisions of the Beijing government, which will have to resolve several issues, the first of which will be to decide whether to allow Evergrande's liquidation. Second, if the decision is made to liquidate Evergrande, it will have to figure out how to repay creditors and which ones to favour. As we read in the 'Post', it is likely that domestic creditors will be favoured, but foreign creditors will also have to be taken into account (how these creditors are treated could influence the future decisions of many foreign investors).

See also

Government bonds: doubts about the Asian credit market

Deflation and a negative outlook: China's growth weaknesses

Investment: Investors remain cautious on the Chinese market

TODAY’S MOST READ ARTICLES

MOST READ ARTICLES OF THE WEEK

MOST READ ARTICLES OF THE MONTH

MOST READ ARTICLES IN THE FINANCIAL FORUM

View classification