Property developer Country Garden (02007.HK) issued a statement on Wednesday, 28 February 2024, confirming that one of its creditors has filed a liquidation petition because it had failed to make payments on a $205m loan. This is the latest blow to the Chinese property market and impedes government efforts to revive the sector.
Chinese property market miseries continue as Country Garden faces liquidation petition
Ever Credit Limited, a division of Kingboard Holdings (0148.HK), lodged the filing against Country Gardens with the High Court of the Hong Kong Special Administrative Region. The hearing has been scheduled for 17 May 2024.
Economists believe that the petition will renew doubts about the debt management capabilities and liquidity of China’s property sector. This market reportedly makes up roughly a quarter of the country’s gross domestic product (GDP).
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In a press statement, Country Garden indicated that it would challenge this filing “vigorously”. The property developer further said:
The Company will seek legal advice and take all necessary actions to protect its legal rights. Furthermore, the Company will seek legal measures to resolutely oppose the Petition, as the Board is of the view that the Petition does not represent the interests of other stakeholders and may impair the value of the Company.
Reuters indicated that Country Garden’s value has plunged by more than 70% in the past year. The company currently has a market cap of 17.6bn HKD.
Should Country Garden be liquidated, it would cast a spotlight not only on the issues in the Chinese property market but also the country’s economy in general.
