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BEIJING: A Hong Kong court on Monday (Dec 4) gave Chinese property giant Evergrande until the end of January to put together a restructuring plan, offering the embattled firm much-needed breathing room as it teeters on the brink of bankruptcy.
The real estate giant’s astronomical debt has become emblematic of a years-long crisis in China’s property market.
Here’s what we know about the state of Evergrande’s finances:
What is Evergrande’s situation?
In June – the last time it publicly disclosed its debts – Evergrande said it owed an estimated US$328 billion.
The company was once China’s biggest real estate firm, a giant in a sector that ballooned as property became the foundation of a burgeoning middle class’ growing wealth.
But a long-running housing crisis has wreaked misery on the lives of homebuyers across the country, many of whom have staked life savings on properties that never materialised.
Unable to repay interest on its loans, Evergrande formally defaulted in December 2021.
In August, the group declared bankruptcy in the United States, a measure intended to protect its assets there.
What do creditors want?
The firm’s creditors are demanding controlling stakes in its equity, Bloomberg reported, with the property giant offering them 17.8 per cent of its parent company and 30 per cent of Evergrande’s property services and electric vehicle groups.
Many of the group’s assets have been sold in recent months in a rush to build liquidity: Around 50 billion yuan (US$7 billion) as of the end of November, according to Chinese media.
But during a hearing in October, the recovery rate for Evergrande’s lenders was estimated at less than three per cent – highlighting the mountain creditors must climb if they want to retrieve their money.
Evergrande has until Jan 29 to come up with a detailed repayment plan, with a Hong Kong judge urging its lawyers to seek “more direct discussion with relevant authorities” to confirm that the company’s restructuring proposal was doable.
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