Chinese property developer’s liquidation hearing begins
A court hearing on the proposed liquidation of Country Garden is due to resume today.
Hong Kong Stock Exchange-listed Country Garden, which used to be China’s largest homebuilder, started defaulting on international bond payments last October, whilst holding $190 billion in liabilities. In total, Country Garden defaulted on $11 billion worth of offshore bonds last year and is currently in the process of restructuring its debt.
In February, Hong Kong-based lender Ever Credit Limited filed the petition at a local court for Country Garden’s liquidation, due to it failing to repay a $205 million loan. At today’s hearing, Country Garden will have to present its plans for debt restructuring or risk a liquidation order. This would follow a Hong Kong court’s ruling last January, for the liquidation of China Evergrande Group, which repeatedly failed to restructure its more than $300 billion of debt.
China’s massive property sector has been struggling since the downfall of Evergrande and other property giants and the liquidation of Country Garden would be another blow to China’s fledgling economy. However, the developer will likely have sought Beijing’s support to ensure its survival. The Chinese government has recently tried to prop up the sector, by ordering state owned enterprises to buy up unsold property. It remains to be seen whether government efforts are successful in stabilizing the domestic property market.
