In China, creditors are knocking on the doors of legal offices to demand payments from embattled Chinese property firms. This is highlighting a major turmoil in the property sector. The developers are now rushing to set up plans to resolve the debt issues and the impact can be seen in the real estate industry.
Some of the most recent cases in court were filed against Jiayuan International Group and Sunac China Holdings. Note that these are the two big names among at least six builders that have received plenty of winding-up petitions within the past few months in the Cayman Islands and Hong Kong. Moreover, China Evergrande Group, Jiayuan, and Sunac have also scheduled their hearings for November month.
Reports reveal that these court filings may cause more serious negotiations among companies and creditors. This may lead to withdrawal of petitions upon agreement or in the other case, the solutions can be found via court proceedings.
Managing Director at Alvarez & Marsal firm, Mr. Ronald Thompson, recently stated that predictions say there will be more filings at the court looking for developer liquidation; mainly because several creditors are feeling frustrated with limited restructuring progress.
As per the Official Reciever’s Office in Hong Kong, it is possible to file a winding-up petition against any company when the creditors are owning a minimum of $10,000 US dollars from the company. In case the court issues a winding-up order, they will soon appoint a provisional liquidator to proceed ahead with the formalities and the liquidator will soon take complete control over the company and its operations. They are also allowed to sell assets and distribute funds among creditors as per their admitted claims.
A few other developers that are experiencing winding-up petitions may include Yango Justice International, Sinic Holdings Group, and Fantasia Holdings Group. These lawsuits may require creditors to invest an extra amount for handling legal formalities and it may further add more pressure on borrowers to propose some relevant repayment options. The website of the Hong Kong court shows notes relevant to Jiayuan and Sunac, but there is no clear information on why the petitions against them were filed.
Evergrande is a widely known property giant in China and this name is also involved in the real estate debt crises in the country. However, in a recent interaction with media after winding up the hearing, they stated that the company is planning to deliver its proposed restructuring plan at the earliest.
On the other side, Sunac revealed that they expect debt restructuring plans to publish at the earliest and they also called the petitions an aggressive move from creditors, especially when the respective creditors have a very small share in the debt associated with the company.
Jiayuan at the same time has received two winding-up petitions and they were either withdrawn or dismissed by the court. These scenarios are also causing a major impact on the brand name of the development firms and are greatly affecting the economic condition of the second biggest economy in the world.
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