The city is ground zero for international investor claims in the long-running Evergrande saga.
The message sent to the Hong Kong Exchange by the defunct Chinese real estate conglomerate last Friday was relatively short, even pithy.
In it, the Evergrande Group said it could not sell enough of its remaining assets to restructure its liabilities so that trading could resume in its long-suspended shares listed on the Hong Kong Stock Exchange.
No Transparency
Given the melodrama of recent years, the numerous convoluted restructuring plans, and the unexpected plot twists and turns – the statement was practically Hemingwayesque.
It was also relatively refreshing. At the onset of the mainland's real estate crisis in 2021, finews.asia took the developer to task for its sheer and complete lack of transparency, following up with a comment in a similar vein on Country Garden and Zhongrong last year.
Ongoing Saga
In fact, you could almost hear the very same kind of impatience oozing from the judgment penned by Hong Kong High Court Judge Linda Chan in January when she mandated the group be wound up given the to and froing that had been going on for over 19 months.
«Despite the 8-weeks’ adjournment, the Company did not provide any further revised proposal or the type of disclosures directed by the Court. Nor did it file any affirmation to update the court and the parties on the restructuring effort and any further revised restructuring proposal within the time limit imposed by the Court,» she wrote then.
No Longer Viable
At the time, as finews.asia reported, an international consulting firm was subsequently appointed to liquidate Evergrande. And, besides the other challenges we indicated then, they have since had little luck selling off any of its assets or maintaining any part of it as a viable business.
Instead, the whole thing is shaping up to be ground zero for China's real estate crisis, particularly as to whether overseas investors will ever get anything back. Or even beyond that, a bare modicum of recognition.
Backroom Deals
Evergrande’s disclosure practices and disrespect of anyone’s claims were glaring, even towards the court, and best encapsulated by a plaintiff solicitor who maintained «the deliberate defiance of the Court and failure to provide the information promised is strongly indicative of a lack of good faith on the part of the Company in putting together viable restructuring proposals».
But wait – it gets better for the group, which was characterized as «hopelessly insolvent» in the judgment. That same solicitor said Evergrande had held «off the record discussions» about restructuring proposals that were not disclosed to all parties and which it did not see fit to communicate to its specific client, which held about $4 billion US dollars in Evergrande debt.
No Respect
The whole thing shows an incredible lack of respect for international investors who have lost money, and who are likely not in the know or privy to backroom discussions that might privilege certain claims over others.
That is one of the main points here, as well as a blatant refusal by Evergrande to fully own up to what has happened while thinking that they can just unilaterally tinker about the edges to placate certain groups of people as a way of making things go away.
Out in the Open
But at least international investors now have the Hong Kong legal system, and the liquidators, to make sure that the unspoken gets spoken – and stays that way.
