Units of China Evergrande’s EV arm have been ordered to enter into bankruptcy proceedings by a local court.
The ailing property giant’s New Energy Vehicle spin-off revealed on Monday a court had ruled that two of its units should move towards bankruptcy and be reorganised – just a week after individual creditors had filed for the move.
Shares of the electric vehicle maker plunged 7% on July 29, a day after individual creditors of Evergrande New Energy Vehicle (Guangdong) and Evergrande Smart Automotive (Guangdong) made their applications.
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Shares of the New Energy Vehicle have dropped nearly 40% so far this year. The firm said a local court hearing was held on August 2.
The EV unit of embattled real estate developer China Evergrande Group had in May updated the market that its liquidators were in talks with a potential buyer to take a stake in the company, increasing chances of extending a new credit line for the firm to support production.
Earlier this year, the unit’s parent China Evergrande, the world’s most indebted property developer facing more than $300 billion of debt, was ordered to be liquidated after it was unable to offer a concrete restructuring plan.
This was more than two years after it defaulted on its offshore debt and followed several court hearings.
- Reuters with additional editing by Sean O’Meara
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