Troubled Chinese property developer Country Garden faces liquidation petition

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Chinese property developer Country Garden, which defaulted on its debt last year, says it has received a liquidation petition from a creditor after not repaying a loan.

The winding-up petition was filed by Ever Credit Limited, which had lent Country Garden a term loan facility worth 1.6 billion Hong Kong dollars ($204.5 million), the developer said in a Wednesday stock exchange filing.

The news, which sent shares in the developer falling by more than 12%, comes just a month after rival property firm Evergrande was ordered to liquidate by a Hong Kong court in a landmark ruling.

The order came after the embattled Evergrande, once the country’s second largest homebuilder, and its overseas creditors had failed to agree on how to restructure the company’s massive debt during talks that lasted 19 months.

There are still questions about how the collapse of Evergrande, the poster child of China’s real estate crisis, will affect investors, thousands of workers and homebuyers waiting for their apartments.

As for Country Garden, it said in the filing it would “vigorously” oppose the liquidation petition, which was filed at Hong Kong’s High Court on Tuesday. A court hearing has been set for May 17, it added.

Last October, a panel of global banks and investors overseeing the credit default swaps market declared that the developer had defaulted on its debt after failing to make a bond repayment by a final deadline that month.

Formerly China’s largest homebuilder, Country Garden missed the payment on a $500 million bond as it battled a liquidity crisis. The company had previously warned investors that it could default on its offshore debt, after reporting a deepening plunge in its sales.

China’s economy has been hobbled by a real estate downturn since 2021, when a government crackdown on developers’ borrowing triggered a liquidity crisis in the sector.

Last week, the country’s central bank cut its key mortgage reference rate by a record amount, as it ramped up efforts to stem the prolonged crisis, which is marked by an ongoing decline in both investment in and sales of property. Dozens of major developers have defaulted on their debt.