Country Garden, a leading real estate company in the past, has entered the moment of the game.
On February 28, Country Garden (02007.)HK) announced that it was informed that Ever Credit Limited had filed a winding-up petition against Country Garden in the High Court of Hong Kong on February 27 in relation to an unpaid term loan and accrued interest in the principal amount of approximately HK$1.6 billion between the petitioner and Country Garden.
Country Garden said in the announcement: "The company will vigorously oppose the petition, will seek legal advice, and take all necessary actions to protect its legal rights, the submission of the petition does not mean that the petitioner can successfully wind up the company." As at the date of the announcement, no winding-up order was made by the High Court of Hong Kong to wind up the Company. ”
Affected by the above news, Country Garden's share price fell sharply. On the morning of February 28, Country Garden fell by more than 12% intraday.
In fact, Country Garden is not the first real estate company to be liquidated. According to incomplete statistics from the Times Weekly reporter, a total of dozens of overseas entities of Hong Kong-listed real estate companies have encountered liquidation petitions from creditors.
It is important to note that a winding-up petition does not necessarily lead to the eventual winding-up of the company. Upon receipt of a winding-up petition, the company may raise a defence against the winding-up in accordance with the law. In addition, a company can still avoid liquidation by, for example, reaching a debt restructuring plan that is agreed upon by the majority of creditors. At present, Sunac China, CIFI Holdings, Fantasia, Logan Group, Xiangsheng Group and other real estate companies have withdrawn their winding-up petitions or the relevant petitions have been rejected by the court through communication with creditors.
A senior industry insider told the Times reporter that the winding-up petition is the right of creditors, and any creditor can apply, but the application does not mean that it will be liquidated. The winding-up is subject to a final decision by the court, which hears a comprehensive assessment and will only approve the winding-up if the value of the winding-up is more in the interests of the majority of creditors. If the company can protect the rights and interests of all interested parties to the greatest extent possible through other means, such as speeding up sales and restoring stable operations, or debt restructuring and asset restructuring, it is a fairer and more beneficial way for all creditors, and the court will dismiss the winding-up petition.
Country Garden noted in the announcement that the High Court of Hong Kong has set a date for the first hearing of the petition on May 17, 2024.
The above-mentioned industry insiders pointed out that according to previous case statistics, it takes a period of statutory research and judgment procedures from acceptance to judgment by the court, and this process may last several months or even longer. In the past, many companies that had received winding-up petitions had negotiated for the petitioner to withdraw the petition or had the petition dismissed by the court on the pleading. The reminder's move is more of a sense of pressure, urging Country Garden to come up with a solution as soon as possible.
Country Garden told the Times that the aggressive actions of a single creditor will not have a significant impact on Country Garden's delivery of buildings, normal operations and the overall restructuring of overseas debts. Referring to other cases of defaulting listed real estate companies in the industry, it is common for individual creditors to apply to the Hong Kong court for the winding-up of their companies. The Company strongly opposes the Petition and will seek legal advice and take all necessary actions to actively and properly defend it with the team of advisors.
Country Garden emphasized that since the announcement that it could not repay all its overseas debts on time, the company has engaged financial and legal advisers to assist in assessing the group's capital structure and liquidity position, and formulating an overall solution. At present, an effective communication mechanism has been established with the representative group of major overseas creditor groups, and the overall restructuring of overseas debts is being actively and orderly promoted. It is the firm belief that the winding-up of a company is a lose-lose situation for all parties. The Company will continue to actively negotiate, communicate and collaborate with major offshore creditor teams to seek the best solution.