Evergrande is finally about to usher in the "finale".
After eight postponements, the High Court of Hong Kong issued a formal order requiring China Evergrande to wind up.
The capital market with a keen sense of smell has long foreseen this, and the stock prices of China Evergrande, Evergrande Automobile, and Evergrande Property plunged together after the opening of Hong Kong stocks on the morning of the 29th.
At 10:19 a.m., trading in the three ** stocks was suspended in accordance with the Main Board Listing Rules, and they fell separately before the suspension of trading. 21% and 250%。
At present, the share price of China Evergrande has fallen to 0163 Hong Kong dollars, and the market value is only 21500 million Hong Kong dollars, the attitude of the capital market has been very clear: Evergrande is almost worthless.
What is liquidation?
To put it simply, there is not much difference from bankruptcy in the mainland, which is roughly to stop the company's operation, then sort out the debts, divide the existing assets, and then the company is dissolved.
Evergrande has a debt of nearly 24 trillion, which is also the largest bankruptcy case in the history of our country.
Since it comes to dividing assets, who among Evergrande's creditors can get the money first?
Some industry insiders said that Evergrande's liquidation order does not mean that the whole drama will end, and Evergrande may still have a glimmer of life, of course, this is only a theoretical glimmer of life.
What's going on?
First of all, according to the relevant laws and regulations of Hong Kong, Evergrande can still appeal after being issued a winding-up order, and if the appeal is successful, the winding-up order can also be revoked.
However, the appeal is not possible, because Evergrande's previous winding-up petition hearing has been postponed eight times, spanning two years.
In other words, the court gave Evergrande 2 years to engage in debt restructuring, but in the end, it did not lead to liquidation, so can the court still give Evergrande a chance?
Secondly, after the court issues a winding-up order, it will nominate a liquidator, who will take over Evergrande's business, during which Evergrande will no longer operate, and the main thing to do is to cooperate with the inventory of assets.
However, if Evergrande comes up with a new restructuring plan, and the white knight comes to the rescue, and the liquidator submits the restructuring plan and passes the creditors' meeting and the court, then Evergrande can still cancel the liquidation.
It's just that this is almost tantamount to a fool's dream, why? Because Evergrande is nearly 24 trillion debts, not to mention the white knights, it's useless for the white saint seiya to come.
So although in theory, Evergrande still has a glimmer of life, but in fact, liquidation has long been a certainty.
According to Evergrande's latest financial report, the company's total liabilities as of June 30, 2023 are 239 trillion yuan, excluding contract liabilities 6039After 800 million yuan, the debt is about 178 trillion yuan.
What does that mean? The contract debt is the money handed over to Evergrande by the buyer, that is to say, there is still a gap of more than 600 billion yuan in the delivery of the house, in addition, Evergrande also owes 178 trillion.
Now Evergrande is about to be liquidated, and creditors are waiting to liquidate Evergrande's assets, but in fact, there are still very complex legal issues behind this, why?
First of all, Evergrande is a Hong Kong-listed company, and the liquidation is carried out in Hong Kong, but the vast majority of Evergrande's debts and assets are in the mainland.
At present, the courts of the mainland and Hong Kong have not yet fully integrated with each other in terms of corporate bankruptcy, and if the laws of Hong Kong are fully followed, then the overseas creditors will most likely be the first to be repaid.
The problem is that if the overseas creditors want to be compensated, they have to auction Evergrande's assets in the mainland, so will Evergrande's creditors in the mainland agree? Of course not.
Since the creditors in the mainland do not agree, the assets cannot be auctioned, and the liquidation is likely to be deadlocked.
Therefore, Evergrande's sky-high debt is a problem, and the legal relationship behind it is also a problem.
In dealing with Evergrande, we are likely to have some measures to break through the original framework, otherwise it will be difficult to solve the problem.
If the legal and policy problems are solved, then the next main question is how to divide the remaining assets of Evergrande?
As mentioned earlier, Evergrande's contract liabilities are still more than 600 billion, and most of Evergrande's projects are in third- and fourth-tier cities, and we calculate it with 500,000 suites, so Evergrande still has 1.2 million houses to pay.
According to the way of buying a house and emptying the "6 wallets", behind these 1.2 million suites are 3.6 million families, about 10 million people.
Therefore, no matter how Evergrande's remaining assets are divided, the first thing must be to meet the demand for guaranteed delivery, because this is beyond the scope of economic problems and involves social stability.
Therefore, people who buy Evergrande houses do not need to be overly anxious, Evergrande is bankrupt, there is no excuse to delay any longer, and there is a high probability that the work of ensuring the delivery of the building will be accelerated.
Of course, it is not right to think that Evergrande's guaranteed delivery of the building must be smooth sailing, why?
Because Evergrande's debts are very complex, the company has many project companies, and there are many cross-guarantees and duplicate guarantees between project companies, which has caused huge difficulties in clarifying Evergrande's debts and made it difficult to revitalize Evergrande's projects.
To give a simple example, for example, there are Evergrande project companies A and B, A took his own land as collateral to borrow from the bank, and then took the land to B as a guarantee, and B also mortgaged the land to the bank, and also took the land to guarantee A.
Some people think that this may not seem complicated, but what about now that C has joined the debts of A and B? What if there are five or six hundred other companies joining in?
Therefore, Evergrande's debt is not only huge but also complex, and it will be difficult to deal with.
But no matter how difficult it is, what should be dealt with still has to be dealt with, after all, ordinary people have worked hard to save money for a lifetime, and they can't live in it when they buy a house, which can't be said anyway.
As for other creditors after the delivery of the building, such as the construction party, banks, financial institutions, etc., they can only wait until the delivery of the building to see how many assets Evergrande has left, and then divide it in accordance with legal procedures.