Evergrande Delisted in Hong Kong as $300B Debt Unravels

On August 25, the China Evergrande group was struck off from the Hong Kong Stock Exchange.

Earlier in the month, Hong Kong Exchange and Clearing informed the most indebted real estate developer in the world that his list would be canceled for non-compliance with one of the requirements “to resume trade, said Evergrande in a file. The company has subsequently announced that it would not ask for the decision of the exchange.

The actions of the developer whose headquarters have been suspended by Guangzhou have been suspended from negotiation since January 29, 2024. On that date, the High Court of Hong Kong ordered the liquidation of Evergrande for the non-presentation of a viable restructuring plan.

Under HKEX rules, companies suspended for 18 consecutive months are canceled. Ironically, the company was only negotiated for a total of 16 months, which is raised on the boom of Chinese goods during the decade.

In early August, the liquidators appointed by the Evergrande court, Alvarez & Marsal, presented an overview of its liquidation process in the last 18 months. In mid-August, liquidators controlled more than 100 Evergrande subsidiaries, obtaining a little of $ 2 billion HK (around 255 million US dollars), mainly non-core assets.

The location and consolidation of the national and foreign assets of the company continue, although the complicated property structures and the insolent on the ground can ultimately restrict the recovery of the creditors. Investigations have resulted in substantial legal complaints, with 187 debt evidence totaling around $ 350 billion HK submitted. However, arbitration of the formal complaint will only occur when a dividend is possible. The local press said that the figure was considerably greater than $ 27.5 billion in diaplored liabilities in the Evergrande financial statements 2022.

The Chinese Three Red Lines policy in 2021 was designed to relax heavy debt developers and cool interior housing prices. The initiative Nui in Evergrande, which had more than $ 300 billion in liabilities. Evergrande was lacking on its offshore obligations at the end of 2021, leading to global fears of contagion of the sharp drop in real estate on the continent.

According to Ross Feingold, an analyst of the political risks of Taipei, the question “is a reminder that despite being listed in a jurisdiction with fairly robust laws and rules of registration, under the coverage of analysts by the main investment banks, periodically issuing debt to its sophisticated finances, and a general perception that it was a sophisticated manager of his finances, many can still badly.”