China Evergrande Group, the world’s most indebted developer, got a final chance to get what could be the nation’s biggest ever restructuring back on track, as a Hong Kong court pushed back a winding-up hearing.
Creditors and borrowers often prefer negotiated restructurings to court-ordered liquidations, given they can exert more control over the process. But the risk of a winding-up rose recently after a shock from Evergrande in late September, when it scrapped creditor meetings at the last minute and said it would reassess its proposed restructuring. Any eventual winding-up would make Evergrande, with about 2.39 trillion yuan of liabilities, the biggest Chinese developer to ever face such a fate.
Challenges for Evergrande have mounted on all fronts. Founder Hui Ka Yan has been suspected of committing crimes and placed under police control, the company said in late September. Once Asia’s second-richest man and worth $42 billion at his peak in 2017, Hui’s net worth has tumbled to about $943 million.
The liquidation hearings stemmed from a wind-up lawsuit filed in 2022 by a creditor, Top Shine Global Limited of Intershore Consult Ltd, who was a strategic investor in Evergrande’s online sales platform. That’s not an easy process. Most Evergrande projects are operated by local units, which could be hard for the offshore liquidator to seize.