Evergrande ordered to be wound up by court in Hong Kong

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A Hong Kong court has ordered China Evergrande to be wound up, in a ruling that opens a new and unpredictable phase in the collapse of the world’s most indebted property developer.

High Court Judge Linda Chan issued the liquidation order on Monday after the developer was unable to come up with a restructuring plan that would satisfy international creditors, despite months of negotiations.

“It would be a situation where the court says enough is enough,” Chan said. “I consider that it is appropriate for the court to make a winding-up order against the company, and I so order.”

Trading was halted in the Hong Kong-listed shares of Evergrande and two of its subsidiaries after the ruling.

The court order is a critical milestone in the drawn-out fa

ilure of Evergrande, which defaulted on its international debts in late 2021 and sparked a liquidity crisis across China’s property developers.

It will allow a liquidator to attempt to take control of Evergrande assets outside China, and could open up other lawsuits related to the billions of dollars of losses related to its collapse.

But its practical implications in the Chinese mainland, where almost all of Evergrande’s assets and the vast majority of its more than $300bn in liabilities are located, remain uncertain.

Evergrande “is still insolvent” and “there is still no viable restructuring proposal” despite multiple adjournments, Judge Chan added, rejecting a request from Evergrande’s lawyer seeking another adjournment with a revised timetable.

Speaking outside the courtroom after the hearing, Fergus Saurin, a partner at law firm Kirkland and Ellis, which represents a key group of Evergrande creditors, said: “We are not surprised by the outcome. It’s a product of the company failing to engage with [us].

“There has been a history of last-minute engagement which has…