Evergrande’s collapse is by far the largest in a crisis that has dragged down China’s economic growth and led to a record spate of defaults by developers. The liquidation will be a test case of the legal reach of Hong Kong courts in China, where most of Evergrande’s assets reside. Any new management will also need to navigate asset sales in an industry lacking liquidity and confidence.
China Evergrande Group received a liquidation order from a Hong Kong court, setting off a daunting process to carve up the biggest casualty of a property crisis that’s upending the world’s second-largest economy.
The ruling on Monday from Hong Kong Judge Linda Chan is the latest twist in a saga that saw Evergrande amass more than US$300 billion ($402.41 billion) of liabilities during China’s debt-fueled property boom, before turning into the poster child of a market bust that shows few signs of ending. The builder was valued at just US$275 million on Monday before trading in its shares was halted, down more than 99% from its peak.
