ALBAWABA – As China's property crisis continues, a long-awaited court hearing into the liquidation of China Evergrande Group in Hong Kong, slated for Monday, was adjourned to January 29, giving the struggling property developer some time to finalise a revamped debt restructuring proposal.
The decision came as the world's most indebted developer, with more than $300 billion in liabilities, sought adjournment unexpectedly and unopposed by the petitioner's lawyer, according to Reuters.
On October 29, Hong Kong High Court Justice Linda Chan said this hearing would be the last before a decision was made on liquidating China Evergrande in the absence of a "concrete" restructuring plan.
In anticipation of the company securing such a plan, China Evergrande stock reversed losses from earlier in the day, rising more than 13 percent, according to Reuters.
Evergrande defaulted on offshore debt in late 2021 and became the poster child of a China’s property debt crisis, which has engulfed the sector. Last week it scrambled to revise its restructuring plan to avoid liquidation, Reuters has reported.
Liquidation of China Evergrande, which listed $240 billion in assets as at June-end, would increase pressure on the reeling sector, which accounts for a quarter of the world's second-largest economy.
China Evergrande became the poster child of the property crisis storming through the country's real state sector - Shutterstock
Its debt woes are a major concern for global investors at a time when China has struggled for a strong post-pandemic recovery, with property sales slowing and hundreds of thousands of homes unfinished.
Other Chinese property developers are facing similar threats, with real estate giant Country Garden struggling to make offshore debt payments as well.
Evergrande has been trying to revamp its debt plan for almost two years. Its original plan was reportedly thrown off course in late September, when the company announced its billionaire founder Hui Ka Yan was under investigation for suspected criminal activity.
At the time, the developer also said it failed to win regulatory approval to issue new US dollar bonds – a crucial part of the restructuring plan – as its flagship onshore unit was also under investigation.
China's property sector is not alone in struggling to shore up debts and deliverables, political and financial, with the United States (US) commercial real estate sector at risk and small US banks carrying most of the risk.
The same goes for various other major markets in the Eurozone, Canada, the United Kingdom and Asia, with some facing market and demand difficulties on top of shortfalls in the delivery of affordable housing pledges, among other domains, in what may be shaping into a global property crisis.
