(Reuters) – A Hong Kong court ordered the liquidation of China Evergrande Group on Monday.
Evergrande, the world’s most indebted property developer, has been at the center of an unprecedented liquidity crisis in China’s real estate industry, which accounts for about a quarter of the world’s second-largest economy.
Evergrande Group, once China’s best-selling developer, erupted into a financial crisis in 2021 and has since defaulted on overseas debt as home sales slowed and new financing channels dwindled, sparking concerns Concerns that the crisis could spread. to the country’s bank.
The following is the development timetable of Evergrande’s debt crisis:
Evergrande’s multiple projects across the country have been suspended due to late payments.
China’s central bank and banking regulator summoned senior executives in a rare warning that Evergrande must reduce debt risks and prioritize stability.
It missed two offshore bond coupon payments totaling $131 million, which were subject to a 30-day grace period.
Evergrande hired financial advisers to review options, warning of cross-default risks amid a slump in property sales.
Founder Xu Jiayin sold 1.2 billion shares worth HK$2.68 billion ($342.7 million), reducing his stake in Evergrande from 77% to 67.9%.
Evergrande Group suspended trading in its shares, citing the company’s inability to publish audited results before March 31 and an investigation into the property management unit’s seizure of 13.4 billion yuan in deposits by banks.
A mansion owned by the chairman of Evergrande Group on a hilltop in a famous residential area in Hong Kong has been confiscated by bank China Construction Bank (Asia).
Evergrande said it has resumed work on 631 pre-sale and undelivered projects.
Evergrande Group said its then-auditor PwC had disagreements on matters related to the audit of its 2021 accounts.
An independent committee has found Evergrande directors to have fallen “below standard” over their involvement in the transfer of loans guaranteed by Evergrande Property Services to the group.
Evergrande announced plans to restructure its offshore debt, offering creditors a package of options to convert its debt into new bond and equity-linked instruments backed by the group and its two Hong Kong-listed companies.
Evergrande said that 77% of Class A debt holders and 30% of Class C debt holders have expressed support for the restructuring plan.
Evergrande’s net profits in 2021 and 2022 will be 476 billion yuan and 105.9 billion yuan respectively, while the net profit in 2020 when operations are normal is 8.1 billion yuan.
Evergrande said it plans to seek protection under Chapter 15 of the U.S. Bankruptcy Code, which protects non-U.S. companies undergoing reorganization from creditors suing or seizing assets in the U.S.
Evergrande announced a loss of 33 billion yuan from January to June, compared with a loss of 66.4 billion yuan in the same period last year.
Evergrande shares resumed trading after 17 months, and its market value has shrunk by 79% from the last time it traded.
China’s State Financial Supervision Bureau approved the establishment of a state-owned insurance company to take over all assets and liabilities of Evergrande Life, an investment company in which Evergrande holds 50% of the shares.
Police in southern China said they had detained some staff at Evergrande Financial Wealth Management, an indirect wholly-owned subsidiary of Evergrande Group.
Evergrande postponed planning meetings originally scheduled for September 25 and September 26, citing the need to re-evaluate the terms of the proposed restructuring.
Evergrande Group said that because its domestic flagship subsidiary Evergrande Real Estate Group was investigated by the China Securities Regulatory Commission for suspected information disclosure violations, it was unable to meet the qualifications for issuing new notes.
Evergrande Group said its founder is under investigation for suspected “illegal crimes.”
Hong Kong’s High Court gave Evergrande a five-week reprieve to reach an agreement with creditors but said the next hearing in December would be the last before a decision is made to liquidate the company.
Evergrande proposed a last-minute revised debt restructuring plan to overseas creditors before the hearing in an attempt to avoid a potentially imminent liquidation.
Evergrande unexpectedly won another extension from a Hong Kong court, giving the developer more time to finalize a revised offshore debt restructuring plan.
Evergrande’s ad hoc bondholders group expressed firm opposition to the revised reorganization terms.
Evergrande New Energy Automobile Group said its vice chairman Liu Yongzhuo has been detained and is under criminal investigation.
Evergrande’s interim group of bondholders joined the liquidation application against the developer.
On January 29, the Hong Kong court issued a liquidation order to Evergrande at a hearing.
(1 USD = 7.8201 HKD)
(Reporting by Clare Jim and Xie Yu; Additional reporting by Roxanne Liu and Kane Wu; Editing by Sumeet Chatterjee and Kim Coghill)