🔹China Evergrande Group has been ordered to wind up, after a Hong Kong 🇭🇰 High Court approved a petition by creditors to liquidate the world’s most indebted property developer, in the biggest such case seen in the city. Evergrande was ordered to liquidate with more than $300 billion in liabilities, having failed to deliver on a restructuring plan as intended after a court reprieve in December '23.

🔹The decision sets the stage for what is expected to be a drawn-out and complicated process with potential political considerations as investors watch whether the Chinese courts will recognise Hong Kong's ruling, given the many authorities involved. Offshore investors will be focused on how Chinese authorities treat foreign creditors when a company fails.

🔹As most of Evergrande's assets are in mainland China, there are uncertainties about how the creditors can seize the assets and the repayment rank of offshore bondholders, and situation can be even worse for shareholders.

🔹This marks another low for China's real estate market after Evergrande was declared to be in default in 2021 after missing a crucial repayment deadline. The billionaire chair and founder of China’s 🇨🇳 Evergrande Group was being investigated and under police surveillance over suspected “illegal crimes,” in Sept. '23.

🔹In 2020, Beijing brought in new rules to control the amount owed by big real estate developers. The new measures led Evergrande to offer its properties at major discounts to ensure money was coming in to keep the business afloat. Now it is struggling to meet the interest payments on its debts.

Video source: SCMP