BEIJING
In the ongoing legal battle involving creditors of Evergrande, China’s financially troubled construction and real estate giant, the court has delayed a hearing, granting the company an extension to formulate a payment strategy.
In the case at the High Court of Hong Kong, Judge Linda Chan expressed a high likelihood of granting the plaintiffs’ request for liquidation and cautioned Evergrande to present a debt restructuring plan before the rescheduled hearing on Dec. 4.
Evergrande, China’s leading construction and real estate company, is at the center of the debt crisis that emerged with the decline in the real estate sector in the country.
Facing a total debt of $327 billion, the company is entangled in multiple lawsuits from creditors, seeking redress for the defaulted 12.6 billion yuan ($1.7 billion) in foreign debt.
In addition to its debt problems, the company is being investigated by regulators and judicial authorities.
The company’s founder and chairman, Hui Ka Yan, was taken into police custody on Sept. 27 “on suspicion of illegal activities”.
The company’s asset management subsidiary, Evergrande Financial Wealth Management, is reportedly under investigation for alleged “shadow banking” activities. Authorities suspect the misuse of funds from securities sold to individual customers for financing housing projects, potentially violating regulations.
On Sept. 18, Chinese police announced the detention of some company employees as part of the investigation. While the identities of those detained were not disclosed, leaked information to the national press suggests that over 10 executives, including General Manager Du Liang and Deputy General Manager Yao Bincai, are being probed for “illegal fundraising.”
Former CEO Shia Haycun and former Chief Financial Officer Pan Darong of Evergrande are also reportedly in custody.
