By Jiahui Huang
China Evergrande Group was ordered to liquidate after the indebted property developer failed to reach a restructuring deal with creditors, bringing the curtains down on one of the biggest corporate failures in China.
The order by a Hong Kong court at a winding-up hearing Monday gives creditors the power to liquidate Evergrande's businesses.
Shares of China Evergrande, its new-energy-vehicle arm and its property-services unit halted trade during the morning session. China Evergrande shares were 21% lower, taking 12-month losses to 90%. China Evergrande New Energy Vehicle shares were 18% lower, while shares of Evergrande Property Services were down 2.5%.
Saddled with some $300 billion in liabilities, Evergrande stopped paying its debts over two years ago and has been negotiating a restructuring with its creditors ever since. It had until Monday to devise a plan to restructure billions in defaulted debt.
"It's not a huge surprise for equities investors," Jefferies chief economist Shujin Chen said.
Hebe Chen, a market analyst at IG International, said the winding-up order marks the "next stage of China's real-estate crisis."
"Not only has it punctured the final bubble of hope, but it has also opened a Pandora's box of shockwaves across all relevant sectors, significantly testing Chinese policymakers' commitment and efforts to save their beleaguered economy and stock markets," she said.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
January 28, 2024 22:20 ET (03:20 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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