Hong Kong-based developer Country Garden Holdings Co. (HK:2007) has secured a six-month breather in its liquidation case, allowing it more time to develop an offshore debt restructuring plan. A Hong Kong court has postponed the liquidation hearing until January 20, 2025, and asked the company to draft a restructuring blueprint.
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Country Garden is the largest private developer in China’s real estate sector. The company has been dealing with financial troubles amid China’s ongoing housing crisis.
More on Country Garden’s Case
In February 2024, Country Garden announced that a liquidation petition had been filed against it due to the non-payment of a $205 million loan. The petition was submitted in Hong Kong by creditor Ever Credit Ltd., a subsidiary of Kingboard Holdings (HK:0148).
This is the second time the court has postponed the hearing since the February petition. The company has assured the court that it will release restructuring term sheets by the end of September, followed by a restructuring support agreement (RSA).
China’s Economic Crisis Impacts Real Estate Companies
Currently, China has been struggling with a sluggish economy and a weak property market. More and more Chinese developers are facing face lawsuits while trying to negotiate with creditors.
Among other players, real estate giant China Evergrande Group (HK:3333) was ordered to liquidate in January 2024 after repeatedly failing to present a viable plan to restructure its debts. Meanwhile, China Vanke Co. Ltd. (HK:2202) earlier stated that it aims to reduce its interest-bearing debt from approximately $44 billion to around $30 billion by the end of 2025. It is also raising funds and considering asset sales to address its liquidity crisis and investor concerns.
Any additional blow to investor confidence could further weaken policymakers’ attempts to stimulate growth in China’s housing sector.
Trading in Country Garden Shares Suspended
Trading in Country Garden shares was suspended in April 2024 after the company postponed the release of its 2023 annual results. Country Garden shares have lost more than 69% of their value over the past year.
