On January 20, a Hong Kong court again adjourned the Country Garden liquidation case until May 26. The indebted Chinese developer Country Garden Holdings presented a restructured plan proposal for liquidation. Justice Linda Chan adjourned the case considering the petition of Ever Credit, a branch of Kingboard Holdings, a company listed in Hong Kong, which produces laminates and chemicals.
At the hearing, Ever Credit requested an immediate liquidation order, while another creditor asked for a four-week delay. Country Garden’s lawyer, Jose-Antonio Maurellet, told the court the company needed four more months but should reach an agreement with creditors by the end of February.
Country Garden’s Liquidation Case
In August 2023, one of the largest mainland Chinese developers, Country Garden Holdings entered a liquidity crisis as it missed a debt repayment deadline of two US dollar-denominated bonds. This sparked a sell-off in the industry and the company’s Hong-listed shares were also suspended on April 2, 2024. The suspension came following the delay in Country Garden’s 2023 full-year and 2024 interim reports.
Country Garden’s Debt Reshaping
Last week, Country Garden announced it hopes to finalize a deal with its offshore creditors on a debt restructuring plan by mid-2025. Earlier this month, the Foshan-based developer shared its first plan to restructure up to $11.6 billion in debt, offering options like turning debt into cash or extending repayment deadlines.
In a delayed earnings report released last week, the company revealed its net loss for the first half of 2024 shrank to 12.8 billion yuan (US$1.75 billion) from 48.9 billion yuan a year ago, while its total liabilities reached US$164 billion by the end of 2023. The company has not yet applied for a trading resumption.
What’s Next for Country Garden?
Avoiding liquidation would help Country Garden refocus on a property market hurt by unfinished homes and low buyer confidence, where policymakers have struggled to make a real impact despite a series of stimulus measures since 2022.
This month, Country Garden announced a proposal to reduce offshore debt by 70% and said it had reached an “understanding” with a group of lenders. On Monday, its lawyer asked for more time to settle three “sticky issues” in talks with two major creditor groups: bondholders holding 30% of outstanding US dollar senior notes and a group of seven banks.
Chan said Country Garden should clarify if it expects to reach an agreement with creditors by the end of February. If not, the petitioner and creditors can request to move the next hearing up.
