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<\/a><\/p>\nEvergrande, which has $300 billion in liabilities (equivalent to the GDP of South Africa), defaulted on its bond payments in 2021 and was unable to offer a concrete restructuring plan to offshore creditors despite 18 months of negotiations.<\/p>\n
What comes next is the long and complex process of liquidation and restructuring, which is complicated by several factors:<\/p>\n
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- Evergrande\u2019s vast real estate assets (around 1,000 projects) are mostly in mainland China. Therefore, their liquidation requires cooperation with Chinese courts in every city in which Evergrande has developments, as well as numerous government bodies. Previous cross-border liquidations instigated by Hong Kong courts have been challenging.<\/li>\n
- Local governments in China may be unwilling to quickly sell the projects and hand over the money, and there is an added risk of social instability caused by incomplete or undelivered homes.<\/li>\n
- The majority of Evergrande\u2019s onshore assets have already been pledged as collateral to onshore creditors.<\/li>\n
- Evergrande\u2019s founder, Hui Ka Yan (Xu Jiayin in Mandarin) is being held under suspicion of involvement in \u201cillegal crimes\u201d, and its major subsidiary, Cheng Hengda Real Estate Group, is being investigated, which has limited the company\u2019s ability to issue new debts and reach an agreement with creditors.<\/li>\n<\/ul>\n