Evergrande in China: Last reprieve for restructuring plan - is there a threat of liquidation?

Evergrande in China: Last reprieve for restructuring plan - is there a threat of liquidation?

According to a report by www.tagesschau.de,

Hong Kong's Supreme Court has once again granted the heavily indebted real estate group China Evergrande a reprieve from its restructuring plan. It should be the last one. The heavily indebted Chinese construction company Evergrande has received a reprieve until the end of January to avert the threat of liquidation. A Hong Kong judge pushed back the deadline for submitting a restructuring plan from December 4th to January 29th. Evergrande is at the center of the Chinese construction sector crisis. In 2020, China's authorities responded to the industry's escalating debt with restrictions on obtaining loans. At Evergrande in particular, this led to payment defaults and project cancellations. In 2021, the group filed for insolvency proceedings.

Can settlement be prevented?
Judge Chan had already said at the previous hearing that this was the last postponement and that she would very likely approve a liquidation if China Evergrande did not find a restructuring plan with the creditors. The group would like to find an agreement with the lenders in the coming weeks. An insolvency administrator could wind up the company and pay off the creditors.

Prevent domino effects
The Evergrande case shows that the era of large private real estate developers in China is coming to an end. A liquidation of Evergrande could also affect other companies. The government will face the challenge of preventing domino effects in the economy caused by major bankruptcies.

As a financial expert, it is important to note that an Evergrande liquidation could have serious implications for the Chinese real estate market and financial industry. The ambiguity and possible uncertainty surrounding the company's restructuring could lead to a decline in investor confidence. In addition, creditors, including foreign investors, could suffer losses. This could lead to a domino effect that could weigh on other companies and the entire financial sector. The Hong Kong court's decision is therefore eagerly awaited by many players in the financial industry. If a settlement were to occur, the impact on the Chinese economy and beyond would have to be closely monitored.