Troubled Chinese developer Country Garden wins 6-month reprieve from liquidation

July 29 (UPI) -- A Hong Kong court handed troubled Chinese property giant Country Garden Holdings a temporary reprieve from possible bankruptcy Monday, giving it more time to come up with a plan to restructure liabilities of $187 billion.

A winding-up petition brought by Ever Credit Limited over a $204.9 million debt was adjourned to Jan. 20, 2025, after lawyers for Country Garden told the court the firm would issue preliminary "restructuring term sheets" by the end of September and agreed to submit a formal Restructuring Support Agreement before the next hearing.

The six-month stay was the second time Judge Linda Chan adjourned the case since Ever Credit filed to force Country Garden into bankruptcy in February with the Guangdong province-based developer vowing in a Hong Kong Stock Exchange filing to "vigorously oppose" the petition at the first court hearing in May.

Country Garden, which has $17 billion in overseas debt and domestic loans, defaulted on a $500 million dollar-denominated bond in October and suspended trading in its shares on HKEX on April 2 after announcing a delay in publishing results for fiscal 2023 saying ongoing "volatility in the industry" had created an increasingly "complex operating environment" and that it needed to collect more information to make appropriate accounting estimates and judgments.

Last month HKEX said that trading in Country Garden shares would not be permitted to resume until it published all outstanding financial results and addressed any audit modifications. It also said the firm must comply with "sufficient operations" rules requiring it to show its business is both viable and sustainable.

Country Garden is the largest among a growing number of Chinese developers battling to avoid following China Evergrande Group which was placed into liquidation by the same Hong Kong court in January after failing to come up with a viable plan to restructure liabilities of at least $325 billion.

Shanghai-headquartered Shimao Group Holdings faces a winding-up hearing on Wednesday while Shenzhen-based Kaisa Group is due back in court Aug. 12 in a last-ditch bid to fend off a winding-up petition from Citicorp which is heading up a major group of bondholders.

State-backed Sino-Ocean is due in court in September.

The firms' woes come amid signs of green shoots in China's property sector -- which contribued as much as 25% of GDP at is peak -- two months after Beijing unveiled a rescue package that included a $41.3 billion relending facility to buy up unsold homes.

A fall in new home prices for the 13th straight month in June factored into a slowdown in the economy which grew at weaker-than-estimated rate of 4.7% in the second quarter, down from 5.3% in the January to March period.