Distressed property developer China Evergrande to revise its restructuring plan
China Evergrande Group is tweaking the terms of its proposed offshore debt restructuring deal to better suit the company's current predicament and meet creditors' demands. The troubled property developer, which lies at the heart of China's property sector debt crisis, didn't share specifics about the alterations. This development follows last month's investigation into Evergrande's founder for unspecified crimes and the company's inability to issue new debt due to an ongoing probe of its main unit.
Canceled hearings and postponed court dates
In the same announcement, Evergrande mentioned that the scheme sanction hearings for Hong Kong CEG-class debt holders and the TJ scheme have been called off. Moreover, the hearing of the company's application to the US bankruptcy court, initially set for October 25, will be postponed. These cancellations and delays further cloud Evergrande's future as it works to finalize a restructuring plan to repay its creditors.
Potential liquidation and its impact
With liabilities surpassing $300 billion (Rs. 24.9 lakh crore), Evergrande holds the title of the world's most indebted developer. The company is bracing for an October 30 court hearing in Hong Kong concerning a petition to wind up the firm. If the court orders Evergrande's assets to be liquidated, it could spell disaster for the struggling company and its efforts to repay creditors. This potential liquidation also raises alarm about the wider impact on China's property sector and economy.
Growing list of distressed Chinese companies
Evergrande isn't the only one grappling with financial woes. Other Chinese companies, like Country Garden Holdings Co., are also feeling the pinch due to weak governance and disclosure practices. These problems are making investors increasingly wary about putting their money into China's borrowers long term. As Evergrande reworks its restructuring plan, investors and stakeholders in the Chinese property sector will be keeping a close eye on the outcome.
