Country Garden liable to Liquidation Petition, is Global Economy at Stake?

The real estate industry of China, which is the second largest capital generator in the whole world, is facing a liquidation issue since 2021. China Realty Giant Country Garden Holdings stated that, a liquidation petition had been filed against the troubled developer for failing to repay a $205 million loan.

In the statement of a regulatory filing to the Hong Kong Stock Exchange, the country said, it will “resolutely” reject the petition, which was submitted by Ever Credit Limited, a Kingboard Holdings company and a creditor. The court has finalized the date of May 17 court for the proceedings.

In an official statement, the company said, "proactively communicate and work with its offshore creditors on its restructuring plan." 

In an interview with Reuters, the noted realty farm stated, "The radical actions of a single creditor will not have a significant impact on our company's guaranteed delivery of buildings, normal operations and the overall restructuring of overseas debts."

Country Garden has appointed KPMG and law firm Sidley Austin as advisers to examine its capital structure and liquidity position and formulate it as the "holistic" solution. 

The share of country Garden deteriorated more than 12% in early trade, lagging a 0.2% gain for the benchmark. A Country Garden dollar bond investor mentioned to Reuters, "Country Garden has taken way too long, messing around with switching advisors and wasting time, so it is no surprise people lose their patience and would rather liquidate them."

In October, the company missed a $15 million bond coupon repayment and so-called ad hoc bondholder groups were formed consisting of international and fund manager investors.