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China Evergrande granted final reprieve as winding-up hearing adjourned

China Evergrande

On Monday, a Hong Kong High Court judge postponed a hearing to wind up China Evergrande Group until December 4, giving the world’s most indebted property developer one more chance to come up with a restructuring plan or risk liquidation.

Evergrande, which has more than $300 billion in total liabilities, defaulted on its offshore loan in late 2021, becoming the poster child for China’s property sector’s financial problem.

The next hearing, according to Justice Linda Chan, will be the final before a decision on the winding up order is reached.

Evergrande needed to come up with a “concrete” amended restructuring proposal before that date, she warned, or the company will likely be closed down.

According to Chan, a liquidator might still negotiate with creditors on a reorganization and make headway toward a solution.

China Evergrande

The stock was down 13% on Monday, after falling as much as 23% in the morning session.

A liquidation of Evergrande, which had total assets of $240 billion as of the end of June, would send shockwaves across already shaky capital markets, but would have little immediate impact on the company’s activities, including its numerous home construction projects.

“I don’t think anyone wants to see it go away.” But, for the time being, we don’t see a better choice being presented by Evergrande, so the likelihood of it being wound up eventually remains high,” said an Evergrande bondholder who requested anonymity because they were not authorized to communicate with the media.

Evergrande did not react to a comment request.

Evergrande had been working on an offshore debt restructuring plan when its billionaire founder Hui Ka Yan was confirmed to be under investigation for possible criminal acts last month.

Top Shine, an investor in Evergrande unit Fangchebao, filed the winding-up petition in June 2022 after Evergrande failed to honor a repurchase deal.