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(Bloomberg) -- A key offshore unit of China Evergrande Group was ordered to wind up in Hong Kong, the latest legal win for liquidators trying to access assets of the world’s most indebted developer.
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The decision was presented in a short hearing Friday morning, without much discussion in the courtroom. A year ago, Evergrande Group was ordered to be wound up in Hong Kong, becoming the biggest casualty of the country’s prolonged property crisis.
Its liquidators subsequently took a series of steps to recover funds from the developer, including filing the so-called winding-up petition against its subsidiary CEG Holdings BVI Ltd. in September.
Evergrande’s court-approved liquidators are still navigating its complex structural maze and thorny legal questions about their reach in mainland jurisdictions where much of its assets are based. The win plays into their strategy to target assets within its offshore units. The developer’s default in 2021 opened the floodgates to record debt failures by other builders, a shock to an economy that had relied on real estate to drive growth.
The unit owns nearly half of Evergrande Property Services Group, the builder’s property management business, which is valued at HK$7.4 billion ($945 million), according to Bloomberg-compiled data. Evergrande Property Services Group was an integral part of its parent’s failed restructuring talks with creditors.
Separately, the liquidators are trying to recover $6 billion in dividends and remuneration given to seven individuals, including the developer’s founder Hui Ka Yan. They also began court proceedings against the builder’s auditors and real estate service companies over valuation reports they produced for Evergrande and its subsidiaries years ago.
The liquidation ruling is a reminder to Chinese developers who’re still struggling to settle unpaid debt with creditors amid sluggish property sales. Shares of another privately-owned developer Sunac China Holdings Ltd. plunged as much as 30% Friday morning after the firm received its second winding-up petition in Hong Kong.
The case number for CEG Holdings BVI Ltd.’s winding-up petition is HCCW 528/2024.
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