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Hong Kong Court Will Rule on Evergrande Rescue Plan in 6 Weeks

The struggling real estate giant posted a combined loss of $81 billion for 2021 and 2022, deepening investor doubts about the viability of the restructuring deal

A partially removed company logo of China Evergrande Group is seen on the facade of its headquarters, near a traffic light in Shenzhen, Guangdong province, China
Evergrande began one of China's biggest debt restructuring processes early last year. Photo: Reuters


A Hong Kong court said on Monday it will decide in September on an offshore debt restructuring plan for ailing property developer China Evergrande Group that, if approved, could see some creditors recoup up to a quarter of what they are owed.

Evergrande, the poster child of China’s property sector crisis, has $330 billion in liabilities, making it the world’s most indebted developer. A default in late 2021 triggered a string of defaults at other builders and left thousands of homes unfinished across China.

In a convening hearing on Monday, the court said it will hold sanction hearings on September 5 and 6 to decide on a restructuring proposal first announced in March.

Evergrande will send out a detailed electronic package of restructuring terms and information to offshore creditors, who will vote on the plan in August, the company’s lawyer told the court.

Citing an updated analysis commissioned from consultancy Deloitte, Evergrande said the recovery rate from its proposed debt restructuring plan would be around 22.5%, compared with 3.4% if the developer is liquidated.


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The March restructuring plan was proposed to creditors with a basket of options to swap debt for new bonds and equity-linked instruments.

Evergrande last week posted a combined loss of $81 billion for 2021 and 2022 and a rise in liabilities in its long-overdue financial results, raising investor questions about the viability of its restructuring plan and operations.

The estimated recovery rate was based on assumptions about creditor decisions on equity options, the developer’s ability to repay creditors and other factors, Evergrande’s lawyer said in response to questioning from the judge.

“Ultimately, it depends on the group’s ability to generate cashflow and its business operation onshore,” the lawyer said.

A separate convening hearing will take place at a Cayman Islands court on Tuesday.

Evergrande, which needs approval from holders representing more than 75% in creditor value in each debt class to pass the plan, said in April that 77% of holders of class-A debt and 30% of holders of class-C debt had indicated support.

A hearing will also be held next Monday in a separate case involving a winding up petition against Evergrande, with the decision ultimately depending on how the restructuring proceeds.


  • Reuters with additional editing by Sean O’Meara


Read more:

China Evergrande Restructure Doubts After $81bn Loss Revealed

China’s Dalian Wanda May be Next Property Giant to Fall

China Property Crisis Intensifies, Cloud Over Country Garden

Evergrande EV Unit Shareholders Agree $3.6bn Restructure

Key China Evergrande Creditor Agrees to Debt Restructure Plan



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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