The embattled China Evergrande Group received a major reprieve in a Hong Kong court as the hearing into a liquidation petition was adjourned to next month. The unexpected move follows the developer’s efforts to finalize a debt restructuring proposal as it grapples with over $300 billion in total liabilities. The adjournment to Jan. 29 came after Evergrande’s lawyers sought more time, stating that no creditors were actively seeking liquidation.
In light of this development, Evergrande’s shares reversed earlier losses to surge more than 13%. The company, which defaulted on its offshore debt in late 2021, has become a focal point of China’s debt crisis that has affected its property sector.
Last week, Evergrande worked on producing a revised restructuring plan to avert a possible liquidation order. However, creditors opposed the latest plan and stated that they would seek liquidation if the terms did not change, despite the developer’s expectation to refine the proposal in the next five weeks.
The potential liquidation of Evergrande, which listed $240 billion in assets as of June, could exert further pressure on China’s already reeling property sector amid sluggish property sales and unfinished homes across the country. This development also impacts global investors, as Evergrande’s debt woes have been a prominent concern in the midst of an economic recovery from the pandemic.
The court’s adjournment has provided Evergrande with more time to engage with relevant authorities for the revamped restructuring plan. The company’s struggles have been ongoing for nearly two years, with its original plan being derailed following the founder’s investigation for suspected criminal activity.
The hearing’s postponement indicates the complex and precarious situation being faced by Evergrande, as well as the broader implications for China’s property market and global investors. This ongoing situation bears close watching as the company and its stakeholders seek a viable path forward.