Hong Kong High Court Issues Evergrande Winding-Up Order

The company confirmed the order in an announcement to the Hong Kong stock exchange, issued under the Listing Rules and Part XIVA of the Securities and Futures Ordinance. The announcement was made by the liquidators acting as agents without personal liability, and it said further updates on the liquidation will follow.

How the case reached this point

The petition dates back to 24 June 2022, when a creditor, Top Shine Global Limited, presented it to the High Court in connection with a financial obligation of HK$862.5 million. At the time, Evergrande told the market that it would oppose the petition vigorously and did not expect it to affect its offshore debt restructuring plans. The hearing was adjourned on several occasions while the company worked on a restructuring proposal for its offshore creditors.

What the Evergrande winding-up order means

As the company's 2022 announcement explained, section 182 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance means that, once the company is wound up, any disposition of property held directly by it, and any transfer of its shares, made after the commencement of the winding up is void unless the court grants a validation order. The commencement date is the date the petition was presented, 24 June 2022. Property owned by subsidiaries is outside that rule.

The order is made against the listed parent company. Control now passes to the liquidators, whose task is to identify and realise assets for creditors. Much of the group's business is conducted through subsidiaries in mainland China, so the reach of the Evergrande winding-up order beyond Hong Kong will depend on recognition and cooperation by courts and authorities in other jurisdictions.

What happens next

Creditors and other stakeholders have been directed to contact the liquidators, and shareholders have been advised to obtain professional advice on the implications of the order and the trading suspension.

Sources

• HKEXnews: China Evergrande Group (In Liquidation), winding up of the company, appointment of liquidators and suspension of trading
• HKEXnews: China Evergrande Group, inside information, winding-up petition