Evergrande Stock Hit As Hong Kong Court Orders Liquidation

(RTTNews) - Shares of China Evergrande Group, the world's most indebted property developer with about $300 billion in liabilities, plunged around 21 percent on Monday's regular trading after a Hong Kong court ruled to liquidate the Chinese property major after it failed to provide a convincing restructuring plan.

The trading of the company's shares was briefly halted in early morning following the sharp drop in the stock value.

In a statement, the company informed that it was ordered to be wound up by the High Court of Hong Kong. Edward Simon Middleton and Wing Sze Tiffany Wong, both of Alvarez & Marsal Asia Limited, were appointed as joint and several liquidators of the company.

The Hong Kong court decision, after an 18-month-long hearing, comes after it was reported that Evergrande and its overseas creditors failed to reach a last-minute deal on how to restructure its huge debt.

While delivering the ruling, Justice Linda Chan said, "It seems to me that the interests of the creditors will be better protected if the company is wound up by the court, so that independent liquidators can take control over the company."

Evergrande, with more than $300 billion in liabilities and around $23 billion in offshore debt, defaulted on its debt repayments in 2021 and has been struggling to renegotiate its debt obligations since then. The company had announced an offshore debt restructuring program in March last year.

The liquidation petition was filed by Top Shine, an investor in Evergrande unit Fangchebao, in June 2022.

The loss-making company had halted its operations for several months due to lack of funds and its attempts to find new investors were not been fruitful.

In August last year, amid the deepening real estate crisis in China, Evergrande had filed for Chapter 15 bankruptcy protection in New York. Chapter 15 allows a heavily indebted company like Evergrande to protect its assets in the US amid its restructuring efforts.

Amid these developments, Evergrande's executive director and vice-chairman Liu Yongzhuo of its EV subsidiary, in early January, was detained on suspicion of illegal activities. Earlier, Evergrande's founder and Chairman Hui Ka Yan, and General Manager of Evergrande's wealth management company, Du Liang, were also arrested for the same reason.

In Hong Kong, China Evergrande shares closed Monday's trading at HK$0.163, down 20.87 percent.