Evergrande, the Chinese real estate giant on the verge of liquidation
We are currently witnessing a major event in the Chinese real estate sector. The Hong Kong court has ordered the liquidation of Evergrande, China’s largest real estate developer. This decision follows the company’s inability to present a viable restructuring plan to repay its colossal debts which amount to more than $300 billion.
This news had an immediate impact on Evergrande’s share price, which fell by more than 20% on the Hong Kong Stock Exchange. Trading of the stock was suspended, as was that of its electric vehicle subsidiary, Evergrande NEV.
Evergrande’s collapse is a blow to China’s economy, as the group was seen as a pillar of the construction and real estate sector, accounting for around a quarter of China’s GDP. However, Chinese authorities have long expressed concerns about the excessive debt of Evergrande and other real estate companies, deeming it a risk to the country’s financial system.
In recent years, the real estate crisis in China has deepened, and Evergrande has been at the heart of this turmoil. In 2021, the group defaulted on its payments for the first time, leading to its declaration of bankruptcy in the United States. Since then, creditors have taken legal action to get their money back, and the situation has gradually deteriorated for Evergrande.
The Chinese authorities therefore took the decision to put an end to this saga by ordering the liquidation of the company. This means that all of Evergrande’s assets will be sold to repay creditors. The judge in charge of the case is expected to announce the details of this liquidation soon and appoint a liquidator to supervise the process.
This decision marks a major turning point in the history of Chinese real estate and raises many questions about the economic and financial consequences of the liquidation of Evergrande. Investors, creditors and workers in the real estate sector will certainly be greatly affected by this situation.
It is therefore essential to remain attentive to the evolution of this affair and its repercussions on the Chinese and global economy. Evergrande’s liquidation could signal a broader restructuring of China’s real estate sector, with far-reaching consequences for many companies and individuals. To be followed closely.