Evergrande liquidation hearing postponed to January will focus on new debt restructuring plan

Chinese real estate developer Evergrande Group said on Monday (December 4) that the Hong Kong High Court had once again postponed Evergrande’s liquidation hearing to January 29 next year. This gives Evergrande nearly two months to finalize a debt restructuring plan proposed to overseas creditors.

Evergrande’s global liabilities exceed US$300 billion. Top Shine Global, an investor in Evergrande’s RV Bao, submitted a liquidation application in June 2022. The liquidation hearing has been postponed seven times so far.

Hong Kong High Court Judge Linda Chan said on October 29 that the hearing originally scheduled for Monday was the last hearing before a decision on Evergrande’s liquidation order. Surprisingly, the applicant’s counsel did not object to this extension.

As soon as the news of the postponement of the liquidation hearing came out, Evergrande’s share price immediately reversed the decline earlier in the day and rose by more than 13%.

Evergrande Group, headquartered in Guangzhou, defaulted on its overseas debt at the end of 2021, becoming a typical representative of the debt crisis that China’s real estate industry has been involved in. It is understood that the company urgently revised its debt restructuring plan last week to avoid liquidation.

“It’s quite surprising that Evergrande has been given more time to reconsider its plans,” said Neil McDonald, a partner at law firm Kirkland & Ellis. McDonald is legal counsel to Evergrande’s ad hoc creditor group.

However, he said that if Evergrande cannot come up with a plan that is accepted by all creditors, it is likely to be liquidated at the next hearing.

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The applicant’s lawyer surprised the court on Monday when he opened the proceedings as he was instructed not to raise any objections to the adjournment.

The judge asked the applicant to notify other creditors one week before the next hearing so that they can continue to take action if necessary if it decides to withdraw the application.

When a reporter asked whether the creditors represented by McDonald would apply to liquidate Evergrande if the applicant withdraws its application, McDonald said: “We will see what happens to the company before the 29th, if there are no changes. , then yes.”

Evergrande’s lawyer told the court that Evergrande expected to “perfect” its debt restructuring plan in the next five weeks.

Evergrande’s lawyers said that according to the revised terms, the shares that Evergrande will provide to creditors are 17.8% of China Evergrande Group, 21.6% of Evergrande Property Group and 28.5% of Evergrande New Energy Vehicle Group.

Bert Grisel, managing director of investment bank Moelis & Co, which advises the same group of creditors, said their clients “categorically” rejected Evergrande’s revised plan because it was smaller than They would be entitled to a smaller portion in a liquidation.

Ting Meng, a China credit analyst at ANZ Bank, said, “Liquidation will not benefit creditors, but it is extremely difficult to get a debt repayment plan that satisfies everyone. This is where creditors and Evergrande get into trouble.” The reason for the deadlock.”

(This article refers to the Reuters report.)