On Monday, a Hong Kong court will hold a hearing on Evergrande’s plan to reorganize its massive debt and avoid liquidation. The company, which is the world’s most indebted property developer, has been facing challenges due to Chinese regulators cracking down on excessive lending in the real estate sector.
Recently, Chinese authorities announced an investigation into Evergrande’s chairman, Hui Ka Yan, for suspected criminal offenses, adding more obstacles to the company’s efforts to resolve its financial troubles.
The Hong Kong High Court has postponed the hearing on Evergrande’s potential liquidation multiple times, but Judge Linda Chan has stated that Monday’s hearing will be the final one before a decision is made.
If Evergrande’s restructuring plan is rejected by its creditors, the company may be forced to liquidate. This comes after Evergrande had to abandon its initial debt restructuring plan in September when it was prohibited from issuing new dollar bonds.
The company first defaulted on its financial obligations in 2021, just over a year after China implemented stricter lending regulations for property developers to cool down the housing market.
The property crisis in China has also affected the shadow banking market, with major institutions such as Zhongzhi Enterprise Group facing insolvency with billions in liabilities.
These challenges have raised concerns about economic spillovers from the property sector, prompting Chinese regulators to prepare funding support for 50 developers to stabilize the market.
