A Hong Kong court has postponed the liquidation hearing for Country Garden, China's major property developer, until January 20, 2025. This delay provides Country Garden more time to finalise its restructuring plan for substantial offshore debt, central to its financial troubles. The petition, filed by Ever Credit Limited due to a USD 205 million loan default, follows Country Garden's default on USD 11 billion in offshore bonds. The company is working on restructuring its debt, with plans to present term sheets to creditors in September. The outcome will significantly impact the property sector and broader market conditions in China.
A Hong Kong court has postponed a hearing regarding a petition for the liquidation of Country Garden, one of China's largest property developers, until January 20, 2025. This delay provides the company with additional time as it seeks to finalise a plan to restructure its substantial offshore debt, which has become a central issue in its ongoing financial difficulties.
The liquidation petition was filed by Ever Credit Limited, a subsidiary of Kingboard Holdings, in February due to Country Garden's failure to repay a USD 205 million loan. The developer, which defaulted on approximately USD 11 billion in offshore bonds last year, has been at the centre of a growing crisis within China's property sector. The industry has faced significant turmoil since mid-2021, leading to a series of defaults and liquidations among major companies, including China Evergrande Group and Sino-Ocean Group.
During the recent court proceedings, Country Garden's lawyer, Jose-Antonio Maurellet, indicated that the developer is optimistic about its debt restructuring efforts. He stated that the company anticipates releasing term sheets outlining the restructuring plan to creditors in September, with plans to seek court approval for this arrangement early next year. The complexity of the restructuring reflects the challenging situation that many Chinese property developers currently face as they navigate financial instability and increased scrutiny from regulators.
A crucial aspect of the ongoing developments is the support Country Garden has received from its creditors, including both bank lenders and bondholders. These groups have backed the adjournment of the liquidation hearing, emphasising the importance of allowing Country Garden the necessary time to implement its restructuring timeline. If successful, the restructuring could potentially help the developer mitigate the looming threat of liquidation, which would exacerbate the already tenuous state of China's property market.
The Chinese government has recently ramped up efforts to stimulate the property sector as part of its broader economic strategy. Measures have included monetary easing and support for homeowners, but many analysts argue that these steps have yet to yield significant improvements in market conditions. With Country Garden employing over 40,000 full-time workers and managing 3,134 ongoing projects-3,103 of which are located in mainland China-the outcome of its restructuring process could have widespread implications for both its employees and the broader construction industry.
As Country Garden continues to work towards stabilising its financial situation, investors and stakeholders remain cautious. The company's stock has been suspended from trading on the Hong Kong Stock Exchange since April 2, pending the announcement of its 2023 financial results. This pause in trading highlights the uncertainty facing not only Country Garden but the entire real estate market in China.
Market analysts are monitoring these developments closely, as a successful restructuring could signal a potential recovery not just for Country Garden, but for the property sector as a whole. Conversely, failure to manage the debt crisis effectively could lead to more liquidations and further diminish investor confidence in the Chinese economy. As the January 2025 hearing approaches, all eyes will be on Country Garden's progress and how it navigates these complex financial waters.
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