Evergrande Liquidation Hearing Tomorrow: Key Bondholders Join Lawsuit

Tomorrow, a crucial hearing on the liquidation of Chinese construction giant Evergrande is set to take place in Hong Kong courts. This development has drawn significant attention, especially with a key group of offshore bondholders backing a lawsuit seeking the company's liquidation.

Key Bondholders Support Liquidation:

Offshore bondholders, holding over $2 billion in Evergrande-guaranteed bonds, join the liquidation lawsuit.

Potential for Quick Decision:

Legal experts suggest increased likelihood of a swift court decision due to the bondholder group's support.

Liquidation Process Overview:

If a liquidation order is issued, interim and official liquidators will be appointed to manage and sell assets for debt repayment.

Debt Restructuring Possibility:

In case of sufficient assets or unexpected investor involvement, new debt restructuring proposals might be presented to offshore creditors.

Share Trading Uncertainty:

Uncertainty looms over the trading of Evergrande shares following the liquidation decision.

Challenges in Asset Sale:

Most of Evergrande's assets are sold or seized, leaving the challenge of finding buyers for the remaining Hong Kong-listed units.

Recovery Rate Concerns:

Creditors anticipate a recovery rate below 3%, contrasting with Evergrande's earlier prediction of 3.4%, after legal issues surfaced in September.

Remaining Assets and Market Value:

Evergrande's remaining assets are mainly two Hong Kong-listed units with a combined market value of $973 million.

Complex Liquidation Process:

The liquidation process involves potential difficulties in selling shares, replacing legal representatives, and could span months or even years.

Market Impact Warning:

Experts warn of potential shock waves in the fragile capital markets due to Evergrande's $240 billion assets liquidation.

Regulatory Order Hearing:

Judge Linda Chan will hold a rare hearing on a possible "regulatory order" at 12 p.m., adding an additional layer of complexity to the situation.

As the Evergrande saga unfolds in the liquidation hearing, uncertainties prevail, raising concerns about its potential repercussions on the broader construction industry and financial markets.

Objective Negative Evaluation:

The impending liquidation of Evergrande, with its vast assets, poses a significant threat to already fragile capital markets, potentially triggering unforeseen consequences and adding to the challenges faced by struggling construction companies.