HK Court Gives China Evergrande a Month to Rejig Its Debt Plan

A Hong Kong judge has given the bosses of China Evergrande a final month to see if they can revise their restructuring plan before ruling on whether the massively indebted developer should be wound up.

A High Court judge, Justice Linda Chan, said on Monday the hearing on an application to liquidate the group would be adjourned until December 4.

The group needed to come up with a revised restructuring proposal before that date, she said, adding that the next hearing would be the last before a decision is made on the winding-up order.

Evergrande, the world’s most indebted property developer, has total liabilities of more than $300 billion. It defaulted on its offshore debt in late 2021 and became the poster child of a debt crisis that has since engulfed China’s property sector.

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Shares drop, assets put at $240 billion

The company’s shares were down 6.8% late on Monday afternoon, after having fallen as much as 23% in the morning session.

Evergrande had been working on an offshore debt restructuring plan but the plan was thrown off course last month when its billionaire founder Hui Ka Yan was confirmed to be under investigation for suspected criminal activities.

Top Shine, an investor in Evergrande unit Fangchebao, filed the winding-up petition in June 2022 because it said Evergrande had not honoured an agreement to repurchase shares the investor bought in the unit.

A liquidation of Evergrande, which listed total assets of $240 billion as at end-June, would send further shockwaves through already fragile capital markets.

But the court move is expected to have little immediate impact on the company’s operations, including its many home construction projects.

Evergrande did not respond to request for comment.

Evergrande revealed the investigation into its founder and one of its main subsidiaries last month, and it was barred by mainland regulators from issuing new dollar bonds, a crucial part of the restructuring plan.

It also cancelled creditor votes originally scheduled for late last month.