(Economic Observer) Evergrande’s overseas liquidation will affect the guaranteed delivery of properties in the mainland?
China News Service, Beijing, January 29 (Reporter Xia Bin) The boots have landed. On the 29th, the China Evergrande liquidation case was brought up again in the Hong Kong High Court. The judge said that China Evergrande's debt restructuring plan lacked progress and the company was insolvent. He formally ordered Evergrande to be liquidated. He held a court hearing in the afternoon to deal with the regulatory order and issued written reasons.
Why was China Evergrande liquidated overseas? Can the work of ensuring the handover of buildings in the Mainland continue? What impact will it have on other private housing companies?
Sean, the relevant person in charge of China Evergrande, responded: "The court's ruling is contrary to our original intention. We can only say that we have tried our best and are very sorry for this."
A senior partner of a well-known accounting firm in Hong Kong who is familiar with cross-border restructuring told a reporter from China News Service: "This ruling is reasonable and consistent with reality."
The above-mentioned partners said that based on the previous performance and information of the capital market, including the expected judgments released by overseas creditors, it can be speculated that in the case of subsequent liquidation, China Evergrande's restructuring has almost no basis. At the same time, the relevant regulations and laws in the Hong Kong market are relatively mature. I believe that the liquidator will take all aspects into consideration and, with the cooperation of the company, through active communication, negotiation and other means, try to protect the interests of creditors and all relevant parties as much as possible.
Guaranteeing the construction of buildings is one of China’s current key livelihood tasks. Xiao Yuanqi, deputy director of the State Administration of Financial Supervision and Administration of China, recently revealed that as of the end of 2023, most of the 350 billion yuan (RMB, the same below) special loans for guaranteed buildings have been invested in the project, and commercial banks have also provided corresponding commercial supporting financing. , to ensure that the task of guaranteeing the handover of the building is completed.
Sean emphasized that the subject involved in the overseas liquidation order issued by the court this time is China Evergrande (03333.HK), which is listed in Hong Kong. The current management and operation systems of Evergrande Group and other domestic and overseas subsidiaries as independent legal entities remain unchanged. , the Group will still strive to do everything possible to ensure the stability of domestic business and operations, steadily promote key tasks such as guaranteeing the handover of buildings, maintain the quality of property services without being affected, and will still make every effort to ensure the smooth advancement of risk resolution and asset disposal, and strive to promote all projects fairly and in accordance with the law. Work.
Legal experts familiar with the situation also mentioned that this overseas liquidation order only targets China Evergrande (03333.HK), one of the entities listed in Evergrande Group’s Hong Kong companies. It must be noted that the liquidation of China Evergrande does not mean the bankruptcy of the domestic entity of Evergrande Group. In the next step, after the liquidator appointed by the court takes over the liquidated entity, the rights of the company's current directors will be terminated. However, this series of procedures generally only targets China Evergrande and its directly held assets.
The above-mentioned legal experts particularly emphasized that home buyers have statutory priority rights in accordance with the law. According to relevant judicial interpretations issued by the Supreme People's Court, under corresponding conditions, consumers of commercial housing who claim their right to claim for house delivery and claim for price return shall have priority over other claims. In other words, there is a solid legal basis for home buyers to have priority in risk resolution and debt settlement.
In addition, China Evergrande, as one of the overseas listed entities of Evergrande Group, and its domestic and overseas subsidiaries are independent legal persons. From the perspective of equity structure, even if the overseas entity is liquidated, the main domestic business of Evergrande Group will not be substantially affected for a period of time. Pragmatically speaking, the impact of this liquidation on the domestic guaranteed buildings will be very significant. limited.
"Generally speaking, as long as debt risks are resolved in accordance with laws and regulations, the guaranteed delivery of the property will be legally guaranteed," the legal expert said.
Based on the current information, the progress of the Baojiao Building project involving Evergrande is generally relatively stable. Industry insiders familiar with the situation revealed that Evergrande has delivered nearly two-thirds of its houses. Some projects may have some difficulties, but I believe With the promotion of all parties, the housing delivery issue can still be properly resolved in the end.
Regarding the risk incident that Evergrande encountered this time, some erroneous views have appeared in the public opinion field, confusing Evergrande's long-term financial fraud and other illegal and illegal accumulation of risks, and even crimes, as a common problem for real estate companies, and even trying to make Evergrande a common problem. The major crisis was distorted into the result of a lack of support for bailing out private enterprises. A senior market observer told a reporter from China News Service that the liquidation of China Evergrande must be viewed fairly, normally, and objectively.
In his view, as long as the legal red line is stepped on and the bottom line of legal fairness and justice is challenged, no matter whether the company is prosperous or liquidated and bankrupt, there is no "too big to fail" policy.
It should be noted that although Evergrande's problems are indeed serious, the market does not need to be overly anxious. From the "16 financial measures" in 2022 to support the stable and healthy development of the real estate market to the "25 measures to support the private economy" announced last year, they all strongly reflect that the government is constantly increasing its support for the private sector in terms of concepts, systems and implementation levels. Economic support.
The financial management department also proposed that all financial institutions should continue to make good use of the "second arrow" (bond financing support tool for private enterprises) to support private real estate companies in bond issuance financing, support real estate companies in reasonable equity financing through the capital market, and adhere to marketization and the rule of law. In line with the principle of internationalization, we will increase financial support for guaranteed buildings and promote industry mergers, acquisitions and reorganizations.
According to relevant sources, as of January 1, 2024, the "Second Arrow" has supported nearly 20 private enterprises in issuing more than 38 billion yuan in debt financing instruments, involving industries including real estate, manufacturing and other important fields, which is instrumental in improving the financing of private enterprises. It has played an important role in improving the environment, boosting market confidence, and resolving project risks.
The person in charge of a well-known real estate market institution said that only by clearing out the risks caused by problematic enterprises with major hidden dangers and serious violations of laws and regulations can we leave a broader and healthier survival and development for other law-abiding, compliant, and healthy enterprises. space. (over)