China’s Country Garden Faces Liquidation Petition from Creditor

The troubled property developer, Country Garden Holdings, has received a liquidation petition from one of its creditors, Ever Credit Limited, raising concerns about China’s struggling real estate sector. The petition, filed for the non-payment of a loan worth 1.6 billion Hong Kong dollars ($204.4 million), has prompted Country Garden to oppose it vigorously and pursue legal measures. A court hearing is scheduled for May 17.

While Country Garden’s Hong Kong-listed shares tumbled more than 12% in response to the news, the company aims to proactively communicate and collaborate with its offshore creditors on its restructuring plan. It believes that the petition will not significantly impact its offshore restructuring process.

This development comes amidst China’s efforts to boost confidence in the real estate market. The International Monetary Fund (IMF) recently projected a 50% drop in demand for new housing in China over the next decade. In January, Chinese property giant China Evergrande was ordered by a Hong Kong court to liquidate, sparking concerns about the wider real estate sector. However, fears of a spillover have diminished as experts believe Evergrande’s issues are contained.

The property sector has historically been a crucial driver of China’s economy, contributing significantly to its gross domestic product. However, rapid growth fueled by debt has led to mounting financial pressures for companies like Country Garden and Evergrande. Their struggles to repay debt obligations have resulted in lengthy debt restructuring processes.

As the situation continues to unfold, Country Garden remains committed to navigating these challenges and finding sustainable solutions. For more updates on this and similar news, visit Business Today.