The High Court of Hong Kong issued a winding-up order against China Evergrande this morning (29 January).
This morning, after hearing the submissions of both parties, the judge said that China Evergrande's debt restructuring plan lacked progress, the company was insolvent, and officially ordered China Evergrande to liquidate. A written judgment and regulatory order will be issued in the afternoon.
Prior to this, Evergrande had filed eight applications for adjournment of hearings. More than 19 months.
Affected by this news, China Evergrande's share price in Hong Kong fell by 20% and was suspended from around 10:17, and Evergrande's share price was 0HK$163, with a total market capitalization of 21HK$500 million. At the peak of its history, Evergrande's total market capitalization exceeded HK$370 billion.
Evergrande also plunged more than 18% and suspended trading.
Due to the concept of new energy vehicles, Evergrande Automobile was once speculated with a market value of 400 billion Hong Kong dollars when the product was not yet listed, and the stock price was as high as 72HK$45, currently 0229 Hong Kong dollars, the market value is only 24HK$800 million.
Evergrande Property today ** 25% to 0HK$39, which was also suspended at around 10:17 a.m.
Evergrande Property's share price was as high as 1974 yuan, with a total market capitalization of up to HK$210 billion, and the current total market capitalization is HK$4.2 billion.
That is to say, at the peak, the total market value of Evergrande was about 1 trillion yuan, and the current three ** only add up to more than 8 billion yuan, a decrease of more than 99%. Many people lost their money on Evergrande's three **. For example, Hong Kong tycoon Liu Luanxiong:
Listed companies that have been seriously dragged down by Evergrande and even changed their fate include Jiakai City, Guangtian Shares, Suning Tesco, Gold Mantis, Quanzhu Shares, Jiayu Shares, etc.
According to the 2022 annual report released by Evergrande, the group's total liabilities are 2,437.4 billion yuan, which is the highest corporate debt in history.
Evergrande has 2100 million square meters of land bank, as well as dozens of old renovation projects. However, as the real estate market continues to cool, the valuations of these land reserves and projects have also shrunk significantly.
Xu Jiayin, the founder of Evergrande, was taken compulsory measures in September 2023 on suspicion of committing a crime.
After the Hong Kong court's winding-up order is issued, where will Evergrande's fate go? Will Evergrande quickly go bankrupt and disappear? Will the Evergrande building that has not yet been delivered be completely unfinished?
The judgment of this issue is that even if the court issues a winding-up order, there is still a long way to go for Evergrande's liquidation and reorganization. A winding-up order would move Evergrande's problems forward.
When an enterprise encounters serious problems, there are various ways to deal with it, such as liquidation, bankruptcy liquidation and bankruptcy reorganization. There is still uncertainty as to which way Evergrande will ultimately go.
Previously, HNA adopted the method of bankruptcy reorganization, divided into multiple business segments, and was owned by different enterprises. The equity of the original founders and executives was basically cleared, and some core figures assumed legal responsibility.
Previously, there was ** speculation: Evergrande may take the HNA model in the future. But this is just speculation, and it seems unlikely that it is decreasing at the moment.
It is estimated that many of Evergrande's debts will eventually be unable to be repaid, and creditors will need to digest themselves. The "guaranteed delivery" of related real estate will also be a long process, and the fate of each real estate may be different.
As for Evergrande 2100 million square meters of land reserves, located in first-tier and second-tier cities in a better location, there will be developers to take over. Third, fourth and fifth-tier cities, coupled with bad locations, I am afraid it will be more troublesome and may be taken back.
After the winding-up order was issued, Zhengguan News interviewed Evergrande's CEO Sean, and his reply was as follows:
Reporter: What impact will the court ruling on liquidation have on Evergrande Group? What's next for Evergrande Group?
Sean: The Group and China Evergrande have done their best to defend against this offshore winding-up petition. Previously, the Group supported and urged China Evergrande and its advisory team to continue to conduct comprehensive and in-depth exchanges with various creditors, adhere to the principles of marketization, rule of law and internationalization to treat domestic and foreign creditors fairly, actively promote overseas debt restructuring, and protect the best interests of domestic and foreign creditors to the greatest extent and fairly based on the actual situation of the company.
Although we have been working hard to restore and enhance the value of our assets and business vitality, we have made a number of major adjustments to the core terms of some restructurings, not only to protect the interests of overseas creditors, but also to ensure the time and space for the company's continuous operation and risk mitigation, and have also received the full understanding and valuable support of a large number of creditors.
However, objectively, the group's operation is facing huge difficulties, resources are extremely limited, and the preliminary voting of creditors has not met expectations, and Evergrande Real Estate has been investigated by the China Securities Regulatory Commission, the actual controller of the group has been taken compulsory measures in accordance with the law due to suspected violations and crimes, and the company also believes that it cannot meet the relevant statutory conditions for the key links of overseas debt restructuring, which makes all kinds of uncertainties continue to intensify, so that the debt restructuring plan is finally difficult to land. Today's decision by the Court is contrary to our original intentions, and we can only express that we have done our best and regret it.
In the future, the Group will face up to difficulties and problems, take all legal and compliance measures, steadily promote the normal operation of the Group's business on the premise of protecting the legitimate rights and interests of domestic and foreign creditors, and will also actively communicate with the liquidators, cooperate with the liquidators to perform relevant procedures in accordance with the law, and promote debt resolution in accordance with international practices and market rules.
I would like to emphasize that the subject of the overseas winding-up order issued by the court this time is China Evergrande (03333.), which is listed in Hong Konghk）。At present, the management and operation system of Evergrande Group and other domestic and foreign subsidiaries as independent legal entities remain unchanged, and the Group will continue to do everything possible to ensure the stability of domestic business and operation, steadily promote key tasks such as ensuring the delivery of buildings, maintain the quality of property services without being affected, and will still make every effort to ensure the smooth progress of risk resolution and asset disposal, and will still do its best to promote various tasks fairly in accordance with the law.
According to the "Zhengguan News" reporter interviewed people who are familiar with Hong Kong's legal systemThe liquidation of China Evergrande does not mean that Evergrande Group is bankrupt in China. In the next step, the rights of the current directors of the company are terminated after the receivership of the liquidated entity by the liquidator appointed by the court, but this series of procedures is generally only for China Evergrande and its directly held assets.
On the other hand, home buyers have statutory priority rights in accordance with the law. According to the judicial interpretation issued by the Supreme People's Court in April last year, under the corresponding conditions, the consumer of commercial housing claims that his right to claim for the delivery of the house and the right to claim the return of the price have priority over other creditor's rights to be repaid, that is to say, there is a solid legal basis for the buyer to have priority rights in risk resolution and debt repayment. 2024 Travel Guide