China Evergrande Group, the world’s most indebted property developer, on Monday was ordered by a Hong Kong High Court to wind up, Kallanish notes.

As early as 24 June, 2022, creditor Top Shine Global filed a liquidation petition against China Evergrande to the Hong Kong High Court. Now, after seven adjourned hearings, China Evergrande has finally been ordered to liquidate.

“The hearing has lasted for one and a half years, and the company still has not been able to bring forward a concrete restructuring proposal,” Judge Linda Chan said in her ruling, “it is the time for the court to say enough is enough.”

Shawn Sui, executive director of Evergrande Group, said that the court's ruling is contrary to the company’s original intention. “We can only say that we have tried our best and are very sorry for this.”

On Monday, as a result, shares of Evergrande group slumped 20.87% compared with the prior trading day on the Hong Kong Stock Exchange.

The impact of this milestone on Evergrande's projects in mainland China may not be large. The arrangement for mutual recognition and enforcement of judgments in civil and commercial cases between the mainland and Hong Kong courts also came into effect on Monday, but bankruptcy and liquidation cases are not applicable. According to the agreement signed by the two parties in 2021, Hong Kong liquidators can only apply to local courts for recognition and assistance in Shanghai, Shenzhen and Xiamen.

The attitude of Beijing is clear. Even after Evergrande failed to move forward with its restructuring and chairman Xu Jiayin was arrested in September, the company was never declared dead. The government's top priority is to fully promote the completion of existing projects to ensure the rights and interests of home buyers and to stabilise market sentiment.

“The Group will still strive to do everything possible to ensure the stability of domestic business and operations, and steadily promote key tasks such as ensuring the completion of existing projects,” says Sui.

As of 30 June 2023, China Evergrande's assets totalled CNY 1,744 billion ($243 billion), of which current assets were CNY 1,578.5 billion, while total liabilities were CNY 2,388.2 billion. 

By the end of November, Evergrande Real Estate Group's unpaid due debts and overdue commercial bills totalled over CNY 316 billion and CNY 206 billion respectively.