January 29th.
A winding-up order was issued against China Evergrande by a Hong Kong court.
So. What is a winding-up order?
A winding-up order is a legal process for the liquidation and distribution of assets against a company.
Evergrande was ordered to be liquidated, which means that Evergrande will face the risk of bankruptcy and the possibility of being liquidated.
After Evergrande passed the bankruptcy liquidation hearing, the next process to be faced is as follows:
Step 1. The court appoints a liquidator.
Responsible for overseeing the entire liquidation process.
Step 2. The liquidator will be on the assets of the Hang Group.
Conduct appraisals and auctions.
to raise funds to pay off debts.
Step 3. The liquidator will give priority to the mortgaged debt.
and other debts with priority.
Step 4. After paying off senior debts.
If there are funds left.
It will be distributed to other creditors in proportion to the debt.
Step 5. If there are still outstanding debts.
Evergrande Group's assets will be depleted.
Bankruptcy proceedings concluded.
Therefore, the order of Evergrande's debt repayment after bankruptcy liquidation is:
Collateral Debt - Senior Debt - Ordinary Debt - Unsecured Debt.
It is not difficult to understand that the mortgage debt is the land assets, company equity, etc. used by Evergrande Group for mortgage, which is also the largest debt in the world.
After all, Evergrande's rollover from a principal of billions to a scale of 2 trillion is inseparable from the support of a large number of bank loans.
Preferential debts, which mainly include statutory preferential payment debts such as employee salaries and taxes. It is difficult to know how long the salaries of Evergrande employees have been in arrears.
By the time the third step is reached the level of ordinary debts, the general bankruptcy liquidation procedure has effectively ended.
According to official data.
Evergrande Group's assets are about 17 trillion yuan.
The total debt is as high as 24 trillion yuan.
Net debt is 700 billion yuan.
But. Once the winding-up process has been commenced.
Evergrande Group's assets will shrink.
1.7 trillion yuan in assets.
Eventually, the cash in hand.
Probably only 12 trillion yuan.
The hole of insolvency.
will be expanded to 12 trillion yuan.
This 1A debt hole of 2 trillion yuan.
What will happen in the end.
It's still hard to predict.
However, Evergrande's debt liquidation may have a huge impact on the domestic property market.
As of the end of 2022, Evergrande Group has about 2100 million square meters of land bank, 993 projects under construction, 458 properties for sale.
Once the liquidation is opened, these land reserves, projects under construction and for sale will be auctioned, and their value will shrink significantly, causing huge negative effects on the land market and the real estate market.
It is worth mentioning.
Evergrande's many small and medium-sized businesses.
It is an ordinary debt in the debt priority.
Wait until Evergrande's assets repay the mortgage.
After the workers' wages and taxes were paid.
There is a high probability that there is not much left.
Small and medium-sized businessmen.
It may become Evergrande bankruptcy liquidation.
The most injured group.