Country Garden faces liquidation threat from bondholders in Hong Kong

Country Garden faces liquidation threat from bondholders in Hong Kong

Country Garden, one of China’s largest real estate developers, is facing a legal challenge from a group of bondholders who have filed a petition to wind up the company in Hong Kong.

The bondholders, who are represented by law firm Kirkland & Ellis, are seeking to recover their investments and force Country Garden to sell its assets to pay off its debts.

Country Garden, which is listed in Hong Kong, has been suffering from a cash crunch amid China’s crackdown on the property sector, which has triggered a wave of defaults and restructuring among developers.

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Country Garden faces liquidation threat from bondholders in Hong Kong

The company, which has a debt load of $40 billion, said in a statement that it was “surprised and disappointed” by the petition, and that it had not missed any bond payments. It also said it had obtained waivers from its lenders to avoid breaching any covenants.

Country Garden said it was confident that it could resolve the dispute with its bondholders through negotiations, and that it had sufficient liquidity and cash flow to meet its obligations.

The company also said it would continue to deliver its projects and protect the interests of its customers, employees, and shareholders.

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The court hearing for the petition is scheduled for February 28, 2024. If the petition is granted, Country Garden could face a cross-default on its other debts, and lose control of its operations and assets.

Country Garden is one of the many casualties of China’s campaign to rein in the excessive borrowing and speculation in the property market, which accounts for a quarter of the country’s economy.

The most prominent victim of the crackdown has been Evergrande, the world’s most indebted developer, which has been on the verge of collapse since last year. Evergrande has also been trying to negotiate with its creditors to restructure its $300 billion debt pile, but has yet to reach a comprehensive deal.

 

The turmoil in the real estate sector has raised concerns of a spillover effect on the wider economy and the global financial system, as well as social unrest among millions of homebuyers and investors who have been affected by the crisis.

The Chinese authorities have been trying to contain the fallout by injecting liquidity into the banking system, easing monetary policy, and providing relief measures for homebuyers and small businesses. They have also urged developers to speed up the delivery of unfinished homes and protect the rights and interests of customers.

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Source : BLOOBERG

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