Evergrande’s Fate in the Hands of Chinese Authorities: A Detailed Analysis
A Challenging Legal Situation
Evergrande’s future hinges on Chinese authorities recognizing the ruling of a Hong Kong court, a decision that could impact the city’s status as a global financial center, legal practitioners say.
Order for Liquidation
On Monday, a Hong Kong court ordered China Evergrande Group, the world’s most indebted developer, with nearly $300 billion worth of liabilities, to be liquidated after around 18 months of failed negotiations with offshore creditors.
Expectations from Offshore Creditors
Offshore creditors expect Evergrande’s liquidator to propose a new offshore debt restructuring plan before resorting to liquidating the company in case of a deadlock in negotiations.
Potential for Restructuring
Experts suggest that restructuring the company could be a better option than liquidation, as it could lead to higher recovery for creditors.
Regulatory Hurdles and Social Impact
Evergrande’s regulatory issues in China, combined with the potential impact on social stability, call for close communication with authorities and regulators in Beijing, Guangzhou, and other relevant organizations.
Complications in Offshore and Onshore Assets
The process of seizing unpledged onshore Chinese assets could create conflicts between onshore and offshore creditors, leading to potential complexities in the liquidation process.
Challenges and Potential Solutions
Mainland courts’ recognition of the Hong Kong judgment, the location of Evergrande’s assets across China, and the challenges of the cross-border procedure pose significant hurdles, requiring efficient solutions for a smooth liquidation process.
Ambitious Plans by the Liquidator
After being appointed as the liquidator, A&M immediately heads to Evergrande’s headquarters to determine the best steps in the interest of the creditors and other stakeholders.
Credible Experience of the Liquidator
A&M’s global expertise in financial consulting and restructuring, including its involvement in the rescue of Credit Suisse, lends credibility to its ability to handle Evergrande’s liquidation.
A&M’s involvement in restructuring then Nasdaq-listed Luckin Coffee Inc after an accounting scandal further highlights its track record in handling complex financial situations.
