After seven postponements, the hearing of China Evergrande's winding-up petition was finally held on January 29 and was cleared up by the High Court of Hong Kong.
Based on the list of high-quality authors from all aspects, China Evergrande's overseas debt is equivalent to about 165 billion yuan, which is divided into three parts: 1. US dollar bills 1914.8 billion;
2. The obligation to repurchase RV Bao shares, 163HK$500 million;
3. Misappropriation of 13.4 billion yuan of Evergrande property.
At present, Evergrande's offshore bond market** with a face value of US$100 has fallen to 1around $5, and its three Hong Kong-listed companies have also fallen to 0Below HK$5.
Despite the strong opposition of China Evergrande officials to the liquidation, creditors have long since lost confidence and cannot reach a restructuring agreement, which is an important reason for the court to issue a winding-up order.
With immediate effect from the date of the winding-up order, China Evergrande will cease operations and shall not dispose of any assets under its name; No shareholder shall be changed, so ** will also be suspended.
Next, the court will appoint a liquidator to take over the company in place of the board of directors and will be responsible for overseeing and handling the entire winding-up process.
This is why the management of China Evergrande is strongly opposed to liquidation!
The company was liquidated, and ordinary employees had no choice but to change jobs; And pampered executives, how difficult it is to find a job with similar salary, and Evergrande's work history will also become a stain on their careers.
Xu Jiayin remains the de facto controller of China Evergrande, holding 5978% of the shares.
The second largest shareholder is Junrong Holdings, which is owned by Boss Xu's ex-wife Ding Yumei, with a shareholding ratio of 599%
The third largest shareholder is a natural person, with a shareholding ratio of only 001%。
It can be seen that in addition to Xu Jiayin and his ex-wife, China Evergrande's public shares are quite scattered!
The psychological impact of China Evergrande's liquidation is far greater than the substantive impact, because it is a holding platform company with no specific business of its own.
Most of the assets in the Evergrande system are incorporated into the listed company China Evergrande, which is roughly divided into two parts:
1. Two Hong Kong-listed companies, Evergrande Property and Evergrande Automobile
At present, China Evergrande directly and indirectly holds 5171% of the shares; Directly and indirectly holds 5854% of the shares.
Evergrande Automobile has long been in debt and has lost its ability to continue operations; Due to the nature of the industry, Evergrande Property does not require high leverage to operate, and is currently the best quality asset under the name of China Evergrande.
Both companies are listed in Hong Kong and are offshore assets that can be sold directly to pay off their debts.
2. 100% equity of Anji***
This is an offshore company registered in the Cayman Islands, which controls the vast majority of Evergrande's assets in the territory through links such as Guangzhou Chaofeng Real Estate and Guangzhou Kailong Real Estate, including real estate, sports, Internet, high-tech, song and dance troupes.
In May 2021, the Supreme People's Court promulgated the Opinions on Launching a Pilot Project on Recognising and Assisting Insolvency Proceedings in the Hong Kong Special Administrative Region.
According to this opinion, the winding-up order of the Hong Kong court also has effect in the Mainland, but the practical significance of the liquidation of Evergrande is very limited.
Because Evergrande's equity in domestic companies has been frozen by domestic creditors.
Although Anji *** is nominally the majority shareholder of Evergrande's domestic company, it has almost no executable assets; And it is not a listed company, and the shares cannot be realized through the ** market.
Therefore, after the liquidation of China Evergrande, what should the subsidiaries and grandson companies do under their names? If these subsidiaries are also to be wound up or bankrupt, separate proceedings must be instituted.
So, what is the proportion of repayment that foreign creditors can receive?
The order of repayment of debts in the liquidation of a Hong Kong company is as follows:
1. Preferential creditor's rights, i.e., employee salary, social insurance and taxation, etc.
2. Secured creditor's rights
Evergrande's offshore debts, even if they are secured, are guarantees from affiliated companies, not property mortgages, and have little practical effect.
3. Unsecured creditor's rights, i.e., ordinary creditor's rights.
4. Shareholders' creditor's rights
The money that Boss Xu personally lent to China Evergrande could only be repaid in the end.
At present, the market value of Evergrande Property and Evergrande Automobile held by China Evergrande is less than 3 billion yuan.
Even without taking into account the share price** and realisation losses after the resumption of trading, the RMB3 billion may not be sufficient to repay the preferential claims after paying the liquidation costs.
Therefore, foreign creditors are likely to get no penny!