Current:Home > MyEthermac|China Evergrande is ordered to liquidate, with over $300 billion in debt. Here’s what that means. -FundGuru
Ethermac|China Evergrande is ordered to liquidate, with over $300 billion in debt. Here’s what that means.
Poinbank Exchange View
Date:2025-04-11 10:34:22
A court in Hong Kong on EthermacMonday ordered China Evergrande to be liquidated in a decision that marks a milestone in China’s efforts to resolve a crisis in its property industry that has rattled financial markets and dragged on the entire economy. Here’s what happened and what it means, looking ahead.
WHAT IS CHINA EVERGRANDE?
Evergrande, founded in the mid-1990s by Hui Ka Yan (also known as Xu Jiayin), it is the world’s most deeply indebted developer with more than $300 billion in liabilities and $240 billion in assets. The company has operations sprawling other industries including electric vehicles and property services, with about 90% of its assets on the Chinese mainland.
WHY IS EVERGRANDE IN TROUBLE?
Hong Kong High Court Judge Linda Chan ordered the company to be liquidated because it is insolvent and unable to repay its debts. The ruling came 19 months after creditors petitioned the court for help and after last-minute talks on a restructuring plan failed. Evergrande is the best known of scores of developers that have defaulted on debts after Chinese regulators cracked down on excessive borrowing in the property industry in 2020. Unable to obtain financing, their vast obligations to creditors and customers became unsustainable. Hui has been detained in China since late September, adding to the company’s woes.
WHY DOES EVERGRANDE’S PREDICAMENT MATTER?
The real estate sector accounts for more than a quarter of all business activity in China and the debt crisis has hamstrung the economy, squeezing all sorts of other industries including construction, materials, home furnishings and others. Falling housing prices have unnerved Chinese home owners, leaving them worse off and pinching their pennies. A drop in land sales to developers is starving local governments of tax and other revenues, causing their debt levels to rise. None of these developments are likely to reassure jittery investors. The health of China’s huge economy, the world’s second-largest, has an outsized impact on global financial markets and on demand for energy and manufactured goods.
WHAT HAPPENS NEXT?
Much depends on the extent that courts and other authorities in the communist-ruled Chinese mainland respect the Hong Kong court’s decision. The court is appointing liquidators who will be in charge of selling off Evergrande’s assets to repay the money it owes. As is typical, only a fraction of the value of the debt is likely to be recovered. In the meantime, Evergrande has said it is focused on delivering apartments that it has promised to thousands of buyers but has not yet delivered.
___
Zen Soo in Singapore and Kanis Leung in Hong Kong contributed.
veryGood! (19945)
Related
- Stamford Road collision sends motorcyclist flying; driver arrested
- Christina Applegate’s 13-Year-Old Daughter Details Her Own Health Struggles Amid Mom’s MS Battle
- Supreme Court rejects challenge to Biden administration's contacts with social media companies
- Maui officials highlight steps toward rebuilding as 1-year mark of deadly wildfire approaches
- California DMV apologizes for license plate that some say mocks Oct. 7 attack on Israel
- Transgender prison inmate assaulted by cellmate in Arizona gets $10K judgment in civil rights suit
- NASA taps Elon Musk’s SpaceX to bring International Space Station out of orbit in a few more years
- IRS is creating unconscionable delays for a major issue, watchdog says. Here's what to know.
- Nevada attorney general revives 2020 fake electors case
- NTSB derailment investigation renews concerns about detectors, tank cars and Norfolk Southern
Ranking
- Tarte Shape Tape Concealer Sells Once Every 4 Seconds: Get 50% Off Before It's Gone
- Few have flood insurance to help recover from devastating Midwest storms
- Washington Wizards select Alex Sarr with 2nd pick in 2024 NBA draft. What you need to know
- 'She nearly made it out': Police find body believed to be missing San Diego hiker
- What do we know about the mysterious drones reported flying over New Jersey?
- Timberwolves acquire Rob Dillingham, eighth pick of 2024 NBA draft. What you need to know
- Squid Game Actress Hoyeon Addresses Devin Booker Dating Rumors
- Elaine Thompson-Herah to miss Paris Olympics after withdrawing from trials
Recommendation
Juan Soto to be introduced by Mets at Citi Field after striking record $765 million, 15
Emma Watson’s Brother Alex Watson Shares Insight into Their Sibling Bond
Two years after All-Star career, Stephen Vogt managing Guardians to MLB's best record
Historic Midwest floods swamp rivers; it's so hot Lincoln melted
Whoopi Goldberg is delightfully vile as Miss Hannigan in ‘Annie’ stage return
Four officers in now-disbanded police unit charged in cover-up of 2020 beating
Snoop Dogg as track and field analyst? Rapper has big presence at Olympic trials
Could Nebraska lawmakers seek winner-take-all elections in a special session to address taxes?