News in Points:
– Hong Kong judge Linda Chan ordered China Evergrande into liquidation, setting up a test of the reach of the former British colony’s courts and creating a critical new phase in the slow-motion collapse of the property developer
– Almost all of Evergrande’s homebuilding activity takes place in mainland China, where most of its liabilities are owed
– There is concern that it won’t be straightforward to recover money out of mainland China, and that the priority is delivering properties that have been sold
– The Hong Kong court’s appointment of liquidators should provide new information about the developer, but the operations are far from straightforward
– There is uncertainty over what assets creditors could seize and how the winding-up process will proceed in the mainland, and whether mainland courts will refuse to recognize Hong Kong winding-up orders
– Evergrande’s founder was placed under “mandatory measures” in September for suspicion of unspecified crimes
– Evergrande will continue to build homes, according to its interim chief executive
– The ruling comes at a time of renewed international scrutiny of legal and political norms within mainland China, where foreign investment has slumped post-Covid pandemic
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