On February 28, Chinese property developer Country Garden announced that it had received a winding-up petition involving an unpaid term loan with a principal amount of approximately HK $1.6 billion and accrued interest.。

According to the announcement, the winding-up petition was filed by Ever Credit Limited ("Ever Credit"), a wholly-owned subsidiary of the Hong Kong-listed company Jiantao Group.。In October last year, Jiantao Group had announced that Country Garden had failed to repay its 15.HK $9.8 billion。Ever Credit files winding-up petition against Country Garden to High Court of Hong Kong SAR, Feb 27。

How Country Garden responds?

Under section 182 of the Companies Winding Up Ordinance, if Country Garden is eventually wound up on petition, a transfer of Country Garden shares made on or after the Commencement Date (i.e. 27 February) will be null and void without an endorsement order from the High Court.。

In the announcement, Country Garden said the company would vigorously oppose the petition。He also stated that the presentation of the petition did not mean that the petitioner could successfully wind up the company.。As of the announcement, the High Court of the HKSAR has not issued a winding-up order to wind up Country Garden.。The High Court of the HKSAR has set the date for the first hearing of the petition at 17 May 2024.。

Country Garden further stated that the company will consult legal advice and take all necessary actions to protect its legal rights.。In addition, Country Garden will also seek legal measures to firmly oppose the petition, as the board believes that the petition does not represent the interests of other stakeholders and may harm the value of the company.。

What other solutions does Country Garden have?？

Typically, Country Garden can try to negotiate with creditors to reach a workable debt repayment compromise to see if creditors will withdraw their winding-up petitions。

In addition, Country Garden may propose debt repayment arrangements under section 674 of the Companies Ordinance (similar to debt restructuring).。When an application is made by the company, creditors or liquidator (if a winding-up order has been issued), the court may order a meeting for all parties concerned to negotiate and negotiate the details of the debt repayment arrangements.。

If the creditors voting at the meeting (representing three quarters of the total value of the debts held by the voting creditors) agree to any debt repayment compromise and the proposal is approved by the court, the compromise will be binding on all creditors.。

It is worth noting that the court has the power to delay the liquidation proceedings of the relevant company to enable the debt repayment arrangements to be implemented.。However, the court will generally order an extension of time only if the creditor presenting the winding-up petition (e.g. Ever Credit above) does not object.。Even if the creditors do not object, the court will only make such an extension order if it considers that the debt repayment arrangement is likely to be approved and if it determines that the delay in the winding-up proceedings will not have adverse consequences for the parties。

Influence geometry？

It is understood that the amount of Ever Credit-related debt of Country Garden accounts for a very low proportion of the company's overall foreign interest-bearing liabilities.。Country Garden said in an interview that the aggressive actions of a single creditor will not have a significant impact on the company's guaranteed delivery building, normal operations and overall restructuring of foreign debt.。

"At this time, the Company expects that the petition will not have a material impact on the Company's restructuring plan or schedule.。The Company hopes that all stakeholders will maintain their confidence in the Company and support the Company's continued efforts to advance the offshore restructuring plan to maximize the preservation of the Company's value and protect the interests of all stakeholders.。"

Country Garden also said in the announcement that it will continue to maintain proactive communication with its foreign creditors and form a restructuring plan with them as soon as possible, with a view to announcing the terms of the plan to the market as soon as practicable.。At the same time, the Company will make every effort to maintain proactive communication with the petitioner and, in the principle of fairness to all creditors, negotiate amicably with the petitioner to properly address the issue (including efforts to cause the petition to be withdrawn or rejected as soon as possible).。

At the end of 2022, Country Garden's total liabilities amounted to 1.4 trillion yuan。Last October, Country Garden missed the deadline for a $15 million bond payment.。Market fears that Country Garden's offshore bonds totaling about $11 billion may be at risk of default。

However, Country Garden has also released good news recently.。This month, more than 30 projects in Country Garden were approved for the "white list," indicating that the company's related projects will be supported by financing, which will help ease the company's financial pressure.。

Winding-up petitions not uncommon

Prior to Country Garden, a number of listed real estate companies had received winding-up petitions, but the final results were different.。

The result is better, such as Longguang Group。

On 16 February this year, Longguang Group announced on the Hong Kong Stock Exchange that the Cayman Islands Grand Court and the High Court of Hong Kong had issued orders on 15 and 16 February local time respectively to revoke its winding-up petition in Cayman and its winding-up petition in the Hong Kong Special Administrative Region.。

Longguang Group's winding-up petition dates back to 2022。At that time, Citicorp International Limited (Citicorp International Limited), the trustee of some of the Group's US dollar bonds, filed a liquidation petition against two of the Group's subsidiaries, Jinhong (Hong Kong) Investment Limited and Runming (Hong Kong) Investment Limited.。Subsequently, the hearing of the winding-up petition went through several adjournments and was eventually dismissed.。

It is reported that Longguang Group's total overseas debt amounted to 8 billion US dollars.。But last month, Longguang Group and regeneration storm。There have been reports that bank creditors have disagreed with bondholders over claims that Longguang Group failed to provide the required information。Bank creditors say they may replace bondholders as new winding-up petitioners。Follow-up development remains to be seen。

The results are poor, as in China Evergrande Group.。

hk high court holds winding-up petition hearing against evergrande on january 29 morning。At the hearing, the court finally formally issued a winding-up order against Evergrande。

Evergrande's winding-up petition also occurred in 2022。In June 2022, Jiasheng Global filed a winding-up petition against China Evergrande with the High Court of Hong Kong, involving a claim in the amount of 8.HK $62.5 billion。Since then, Evergrande has submitted a total of eight petitions for adjournment of hearings in order to advance its debt restructuring plan.。The last extension application was announced on December 4, 2023.。

In court, Judge Chan Ching-fen decided to issue a winding-up order after considering that Evergrande had spent a year and a half but its debt restructuring plan was still going nowhere.。In addition, there have been media reports that a special group of major overseas bondholders joined the winding-up petition before the winding-up order took effect, which may have contributed to Evergrande's eventual winding-up order.。It is reported that this special group holds a total of more than $2 billion in offshore bonds guaranteed by Evergrande and its。

According to incomplete statistics, in the past two years, dozens of Hong Kong-listed real estate companies have received winding-up petitions, but most of them have not entered the substantive winding-up process.。More often, winding-up petitions are used as a means for creditors to put pressure on real estate companies。It remains to be seen to what extent this winding-up petition faced by Country Garden will eventually develop。