Country Garden returns to court to make case against liquidation

CHINESE builder Country Garden Holdings is under increasing pressure to show progress in its debt restructuring efforts as it squares off against creditors seeking its liquidation in a Hong Kong court.

The Monday (Jul 29) hearing is the latest in its legal wrangling with creditors after Ever Credit, a unit of laminates maker Kingboard Holdings, filed a winding-up petition against it in February.

Country Garden, once China’s largest developer by sales, continues to struggle amid a prolonged property crisis in the world’s second-largest economy. In June, the company’s contracted sales plunged 73 per cent to 4.3 billion yuan (S$797 million) from a year earlier, according to an exchange filing.

The main purpose of a wind-up petition is to speed up the debt-restructuring process by forcing the defaulted company to come up with a repayment plan through negotiations with creditors. The builder said last month that work on its restructuring was continuing and that it had regularly addressed due diligence requests from bank creditors and a key group of bondholders.

After defaulting on US dollar bonds last year, the distressed real estate giant in May made interest payments for two bonds within a grace period after missing an initial deadline earlier. The move averted a potential test of a Chinese programme to backstop distressed developers’ debt.

Country Garden has become one of the biggest casualties of China’s real estate crisis, with 1.4 trillion yuan of total liabilities, according to its unaudited 2023 interim results. The Foshan-based developer suspended trade in its shares in the Hong Kong market in March after postponing the publication of its annual report. BLOOMBERG