Former Chinese real estate giant Evergrande ordered to liquidate

A Hong Kong judge issued the order on Monday, citing a failure to restructure significant debt, despite 19 months of negotiations between the company and its overseas creditors. Based in Hong Kong and the Chinese mainland city of Shenzhen, real estate development company China Evergrande Group defaulted on its debt in 2021 and filed for bankruptcy protection in the United States last year. Records reveal Evergrande currently carries about $333 billion in liabilities, only about $240 billion in total assets, and owes overseas creditors more than $25 billion. While the liquidation will affect the Hong Kong offices and assets of Evergrande, it will not affect the independent legal subsidies of the company. One example of this is Hengda Real Estate Group, which bases most of its assets in mainland China. Experts say the company’s liquidation could negatively affect the Chinese economy.

What led to the company’s demise? New York Times business reporter Alexandra Stevenson cites poor accounting practices and corporate oversight as reasons for Evergrande’s downfall. Stevenson reports that Evergrande promised housing units that were never built, stopped paying real estate agents and construction workers, and couldn’t account for the whereabouts of billions of dollars.

Dig deeper: Read about China’s financial bubble in WORLD Magazine’s By the Numbers.