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China’s largest private property developer grapples with liquidation petition for failing to repay a term loan

China’s largest private property developer, Country Garden Holdings, revealed on Wednesday that it faces a liquidation petition due to its failure to repay a term loan facility valued at HK$1.6 billion ($204.5 million). The petition was filed by Ever Credit Limited, a creditor and subsidiary of Kingboard Holdings, with a court hearing scheduled for May 17.

This development comes in the wake of a liquidation order against China Evergrande Group, the world’s most indebted property developer, issued in late January, indicating persistent financial struggles in the Chinese property sector. Country Garden responded to the situation by stating its intention to “proactively communicate and work with its offshore creditors on its restructuring plan.” The company aims to disclose the terms of the restructuring plan to the market at the earliest opportunity.

Despite the challenges posed by the liquidation petition, Country Garden assured stakeholders that it would not significantly disrupt guaranteed building deliveries, normal operations, or the overall restructuring of overseas debts. In October, Kingboard initiated legal action against Country Garden, making it one of the first listed companies to do so. A unit of Kingboard, owed HK$1.6 billion ($204 million), issued a statutory demand seeking repayment.

In response to the financial strain, Country Garden has engaged KPMG and law firm Sidley Austin as advisers. Their mandate is to assess the company’s capital structure and liquidity position and develop a comprehensive solution to address the financial challenges. The situation in October saw Country Garden miss a $15 million bond coupon repayment, prompting the formation of ad hoc bondholder groups comprising international and fund manager investors.


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