Investor Petitions to Liquidate Major Unit of China Evergrande

An investor has filed a petition to a court in China to liquidate a major unit of the heavily indebted property developer China Evergrande, according to a stock filing by the petitioner, Vanward, on Wednesday.

Vanward, a Shenzhen-listed electric appliance manufacturer, cited a dispute with the Evergrande unit Guangzhou Kailong Real Estate over an investment worth 200 million yuan ($27.9 million). The court in Guangzhou is currently reviewing the case, the filing stated.

China Evergrande, which has been grappling with a massive debt crisis, did not immediately respond to a request for comment from Reuters.

Guangzhou Kailong Real Estate is a crucial unit of Evergrande, controlling a 60.3% stake in Hengda Real Estate, Evergrande’s flagship property entity in mainland China, according to the business registry database Qichacha.

In December 2022, Vanward won an arbitration ruling in Shenzhen that ordered Kailong to return the investment with accrued interest and legal costs. However, Vanward reported that Kailong has yet to comply with the ruling.

This development follows closely on the heels of another setback for Evergrande. On Monday, Evergrande’s electric vehicle unit announced that a Chinese court had ruled for two of its subsidiaries to enter bankruptcy and undergo reorganization.

Earlier this year, in January, a Hong Kong court ordered the liquidation of Evergrande, once China’s largest property developer, after it failed to present a satisfactory restructuring plan for its $23 billion in offshore debt.

China Evergrande currently faces over $300 billion in liabilities, making it one of the most indebted companies globally. The ongoing financial troubles have had significant implications for China’s real estate market and broader economic stability.