CHINA Trends and Developments Contributed by: Lingyue Sun, Xiang Mao and Yi Wu, Merits & Tree Law Offices
well as commercial banks have introduced sev - eral corresponding measures. In addition, debt restructuring of real estate developers is also under way. According to media statistics, since the second half of 2021, more than 50 listed real estate developers have started debt restructuring processes, many of which are giants and industry leaders. A rela - tively positive signal is that some companies have completed or partially completed debt restructuring, laying the foundations for dealing with troublesome debts. Nevertheless, Chinese real estate developers are still facing a very difficult situation. For instance, China Evergrande Group was ordered to wind up operations in early 2024. Therefore, the rescue of real estate enterprises still has a long way to go. Since the real estate developer plays a signifi - cant role in the industry, a stable and predictable market may not exist without the participation of healthy developers. In this regard, it is of great importance to support developers out the debt crisis. Winding-Up of China Evergrande Group At the beginning of 2024, a piece of big news spread through China’s real estate market. On 29 January 2024, China Evergrande Group (HK.03333, “Evergrande” or the “Company”) was ordered to wind up. Given that a number of China’s leading real estate developers have fallen into the debt crisis in recent years, the winding-up of Evergrande may give us an exam - ple from which to observe the current situation of China’s real estate developers. China Evergrande Group is one of the largest real estate companies in China. Mr Xu Jiayin (also known as Mr Hui Ka Yan) founded Evergrande Real Estate Group Limited (“Evergrande Real
Estate”) and a group of companies (together the “Group”) in 1996 in Guangzhou. The Company has been listed on the Main Board of the Stock Exchange of Hong Kong Limited since 2013. According to the announcement by Evergrande on Hong Kong Exchanges and Clearing Limited, on 24 June 2022, Top Shine Global Limited filed a winding-up petition against the Company to the High Court of the Hong Kong Special Admin - istrative Region (the “High Court”) regarding Evergrande’s debt in amount of HKG862.5 mil - lion. On 29 January 2024, Ms Linda Chan, the judge of the High Court, made a winding-up order against the Company pursuant to the Compa - nies (Winding Up and Miscellaneous Provisions) Ordinance (CWUMPO) based on the facts that the restructuring plan had no progressed and the Company was insolvent. Evergrande’s Case Provided the Market with Directions and Solutions Overall, Evergrande’s debt crisis is a complex and wide-ranging event in relation to China’s real estate market, financial system and even the macro economy. The winding-up of Evergrande is an unprece - dented case in China’s real estate industry. It has a systematic and profound impact on various aspects, including: • the mutual recognition and enforcement of bankruptcy-related court decisions between Hong Kong SAR and the Mainland; • the determination of the scope of bankruptcy estate; • the settlement of claims of creditors in Hong Kong and the Mainland; and
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