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Court Orders Chinese Property Developer Evergrande To Liquidate

Shares of Chinese real estate developer Evergrande have ceased trading in Asia after a court in Hong Kong ordered the company to liquidate.

The stock of Evergrande had plunged more than 20% on news of the court ruling before trading in the shares was stopped on the Hang Seng exchange.

The liquidation order comes amid a spiraling debt crisis at Evergrande and in China’s broader real estate sector.

Overseas creditors failed to reach a deal this past weekend to restructure Evergrande’s debt, leading to the court order forcing a liquidation of the real estate developer’s assets.

Evergrande is the world’s most indebted property developer. The company first defaulted on its debt payments in 2021 and announced a debt restructuring program in March 2023.

Cina’s government in Beijing has been trying to prevent the debt crisis in the property sector from spreading to other areas of the economy.

Last week, the People’s Bank of China and the Ministry of Finance announced a plan to help boost liquidity available to property developers in the nation of 1.4 billion people.

The plan, which will remain in place until the end of 2024, will ease a lingering cash crunch for Chinese developers after Beijing cracked down on the sector to address bloated debt levels.

Another Chinese property developer, Country Garden, is also struggling to pay off its debt. However, that company said recently it may avoid a default on its bonds.

The timing of Evergrande’s liquidation is not yet known.