A Hong Kong court has ordered the liquidation of the Chinese real estate giant China Evergrande, marking a significant moment in the downfall of the world’s most indebted property developer. This decision comes more than two years after the company’s official bankruptcy, which triggered financial challenges for Chinese developers and continues to impact the world’s second-largest economy, reported the Financial Times.
High Court judges, led by Linda Chan, issued the liquidation order after Evergrande failed to present a satisfactory restructuring plan that would meet the demands of international creditors during protracted negotiations. Despite being listed in Hong Kong, most of Evergrande’s assets and liabilities, which exceed $300 billion, are located on the mainland of China.
This decision raises questions about the jurisdiction of Hong Kong courts over the Chinese mainland, where foreign claims traditionally have little influence, and the slowdown in the real estate market remains a significant political challenge for Beijing.
Edward Middleton and Tiffany Wong from the restructuring firm Alvarez & Marsal have been appointed as liquidators for Evergrande. The court ruling theoretically allows the liquidators to attempt to take control of some of Evergrande’s assets on the mainland of China due to a mutual recognition agreement for bankruptcy and restructuring between Hong Kong and certain parts of China. However, it remains uncertain how mainland courts will accept the liquidation order from Hong Kong.
