Country Garden, China’s largest real estate developer as recently as 2022, said on Wednesday that a creditor had asked a Hong Kong court to liquidate its operations and pay off lenders, in the latest sign that China’s housing crisis continues unabated.
Ever Credit Ltd., a Hong Kong lender, is petitioning the city’s High Court to shut down Country Garden. The court filing involves Country Garden’s failure to repay a loan of $204 million plus interest owed to Ever Credit, the real estate developer told the Hong Kong stock market.
Ever Credit’s petition, known as a winding up petition, is meant to force Country Garden to close its doors and sell its assets to make money it can use to pay back its creditors. The move follows a High Court order last month for the liquidation of China Evergrande. Country Garden dethroned Evergrande as China’s largest developer in 2021 when Evergrande endured a financial collapse.
Country Garden said it would fight the court petition “vigorously,” and that the first hearing on the petition had been scheduled for May 17.
More than 50 Chinese property developers have defaulted on debts since 2021. They have refused to repay overseas creditors while still making arrangements with Chinese banks for possible eventual repayment.
Many of these developers have shares listed on the Hong Kong stock market or have borrowed there, or both. But creditors face formidable obstacles in seeking to recover loans from Chinese real estate developers through petitions to the court system in Hong Kong, said Zerlina Zeng, the head of East Asia corporate credits at CreditSights, a global credit research firm.
