Creditors file liquidation petition for developer Country Garden in HK

The first hearing date is scheduled for May 17 at Hong Kong’s High Court, after Ever Credit Ltd. filed its so-called winding-up petition dated Tuesday. Country Garden failed to make payments on a term loan facility of about HK$1.6 billion ($204 million), plus accrued interest, to the lender, according to an exchange filing. 

The development will likely inject a sense of urgency into Country Garden, whose liquidity crisis shook Chinese financial markets in recent months, to expedite progress on delivering a debt overhaul blueprint to creditors. Dragging its feet may risk repeating the fate of rival China Evergrande Group, which suffered a historic liquidation order by the Hong Kong court last month.  

The Guangdong-based developer overtook Evergrande as the epicenter of the nation’s property crisis when it defaulted on a dollar bond in October. Helmed by one of China’s richest women Yang Huiyan, Country Garden has about $10 billion of offshore bonds outstanding, according to Bloomberg-compiled data.

Country Garden’s dollar bonds trade at deeply distressed levels of around 8 cents on the dollar, showing how little money investors expect to recover, after some were near 80 cents in June. Its shares plunged nearly 14% Wednesday, bringing the loss in the past 12 months to over 70%.

The winding-up petition “is likely a necessary process for the petitioner,” said Zhi Wei Feng, a senior analyst at Loomis Sayles Investments Asia Pte. “To other creditors, it is good to see some push factor.”

Ever Credit is a unit of Kingboard Holdings Ltd., a Hong Kong laminates maker which in October issued a so-called statutory demand to Country Garden for repayment.

Country Garden said its debt that…