Source: Bloomberg
China Evergrande may usher in the "last" liquidation on December 4th.For real estate companies with a liability scale of 2 trillion yuan, liquidation will be rare in history, and the market focuses on the possibility and effectiveness of the law on the launch of the law.
One of the keys to this judgment is Evergrande's progress of overseas debt reorganization.During the last hearing, the Hong Kong High Court judge Linda Chan hinted that it would make a judgment on December 4, and it may issue a liquidation order without a substantial reorganization plan.
"It is expected that the hearing on December 4 will attract great interest," Lance Jiang, partner of the law firm, said on the one hand, because the scale of Evergrande's breach of contract is large, and the market participants are also very very very very very very very very very very very very very very very able to do.Interest understanding whether the liquidator appointed in Hong Kong will be recognized in mainland China.
In September, Evergrande said that it must re -evaluate its overseas debt restructuring plan, which shocked the market. Evergrande said that it could not meet the requirements of China's issuance of new bonds, which was originally a key part of its debt restructuring.On the last liquidation, when the judge asked how to designate a new plan, Evergrande legal representatives stated that they would seek the shares of the subsidiary as an important part of the reorganization of debt.
Reuters previously reported that in the modified debt reorganization plan, Evergrande except for the creditors to take out the 30%of the two Hong Kong subsidiaries of Evergrande Property and Evergrande Automobile, in addition to the proposals of Evergrande Property and Evergrande Automobile, they also proposed to come up with Evergrande.17.8%of the shares.However, on December 1st, Bloomberg quoted people familiar with the matter that creditors demanded their debt to replace their debt with the controlling stake in Evergrande, Evergrande Property and Evergrande Motor.
It is unclear whether Evergrande responds to this proposal or whether it will take a step forward to reach an agreement.The offshore bond holder group of Jingcheng Co., Ltd., China Evergrande Affiliated Company, issued a statement on Friday stating on Friday that there was no benefit to launch the "any bankruptcy procedure related to Evergrande".
From the face of liquidation lawsuits in 2022, Zhong Evergrande has delayed the number of hearing during the period. Whether it can provide a restructuring plan recognized by the court this time is essential for the issuance of liquidation orders.The Hong Kong Court has issued at least three liquidation orders to Chinese developers since the debt crisis in 2021, including Jiashi International, the main body of Sunshine City.After the liquidation order is released, the court can appoint a liquidation person. The liquidator will obtain control from directors and management to make major business decisions and seek income for creditors.For example, Deloitte is appointed as the liquidator of Jiashi International.
Applicable?
The assets of Chinese -funded insurance housing companies are mostly located in the country, often challenging the challenge of overseas creditors.And for companies like Evergrande such as Evergrande, whether the mainland courts can recognize the liquidation order issued by the Hong Kong courts also have suspense.Bloomberg Industry Research (BI) analyst Andrew Chan said that if the Hong Kong court issued a liquidation order, "offshore creditors may still need to wait for the decision of mainland China in order to seize and liquidate offshore assets in advance."
He pointed out that there are legal arrangements between the mainland and Hong Kong on related matters, but have not been practiced, or it may not be suitable for a huge bankruptcy entity such as Evergrande.
The Supreme People's Court of China issued a pilot work on the development of recognition and assisting the Hong Kong Special Administrative Region's bankruptcy procedures in 2021, and provided a basis for the implementation of the Hong Kong court's liquidation order.According to the opinion, the Supreme People's Court designated the pilot work to recognize and assist Hong Kong bankruptcy procedures for recognition and assistance to Hong Kong bankruptcy procedures.
Different paths
Debt reorganization or bankruptcy liquidation is the main way for creditors to restore investment losses. The latest case is that Sunac China's debt restructuring has recently taken effect.However, for Evergrande, the chairman of the board of directors Xu Jiayin has been adopted for mandatory measures for suspected illegal crimes, and the unexpected emergence of the restructuring storms and the shaking of investors' position on whether they liquidate are all challenged.
Regardless of whether Evergrande's debt is finally reorganized or bankruptcy, it will provide examples for other Chinese housing companies in other breach of contract, and it will also become an important reference for creditors' recovery methods.
In the long waiting process of Evergrande's reorganization and litigation results, existing creditors took action to take over some assets and fought a layer of protection for maintaining rights and interests.In late November, Olixian Asia Capital took over the two Hong Kong mountain -top mansion related to Xu Jiayin, with a total market value of over 1.5 billion Hong Kong dollars (S $ 256 million). At the beginning of last year, it was reported that Oak Capital controlled Evergrande's original use of overseas debt restructuring.Mortgage assets.
