Rosalind Evans
The financial turmoil surrounding China’s once-prominent property developer, Evergrande, has escalated as its shares plummeted to an all-time low following a Hong Kong court’s decision to adjourn a crucial winding-up hearing. This development is a new blow to the beleaguered firm, which has been grappling with various challenges, including investigations into its executives and difficulties in restructuring its debt.
Shares of Evergrande hit a record low of 18.8 Hong Kong cents (2.4 U.S. cents) after Justice Linda Chan from Hong Kong’s High Court delayed the winding-up petition hearing from October 30 to December 4. This gives Evergrande a narrow window to come up with a revised restructuring proposal, failing which, the company will likely be wound up. “Evergrande must come up with a revised restructuring proposal before that date, or the company will likely be wound up,” Justice Chan stated.
This development follows a series of setbacks for Evergrande. In June 2022, Top Shine, an investor in Evergrande unit Fangchebao, filed a winding-up petition against the property firm. However, the petition was put on hold in light of Evergrande’s ongoing restructuring efforts. Additionally, in late September, Evergrande disclosed that its director and executive chairman, Hui Ka Yan, was investigated for suspected crimes. “Hui Ka Yan has been subject to mandatory measures by the law due to suspicion of crimes,” Evergrande revealed in a statement to the Hong Kong Stock Exchange.
Furthermore, Evergrande faced difficulties in its debt restructuring endeavours. The company delayed a debt restructuring meeting and announced that its sales had fallen below expectations since its March debt restructuring announcement. Consequently, Evergrande found it necessary to reassess the terms of the proposed restructuring “to meet the company’s objective situation and the demand of the creditors.” Moreover, an investigation into subsidiary Hengda Real Estate in September hampered Evergrande’s ability to issue new notes under its debt restructuring plan.
The delayed court hearing and the plummeting share prices indicate the precarious position that Evergrande finds itself in. The company’s struggles symbolize the broader challenges facing China’s property sector, which has been hit hard by regulatory pressures and economic headwinds. As the clock ticks down to the December 4 hearing, the world will watch closely to see if Evergrande can pull itself back from the brink and forge a path to financial stability.
