(Reuters) -China South City <1668.HK> on Monday became the first state-backed property developer to get a liquidation order from the Hong Kong High Court since the Chinese property sector tipped into a debt crisis in 2021.
The news, announced by the company on Monday, comes more than a year after a group of its creditors filed a lawsuit in the Hong Kong court to recover at least $1.4 billion from China South City.
The world’s most indebted property developer, China Evergrande Group, along with a handful of peers have also been ordered to liquidate since 2021 as they failed to come up with viable restructuring plans or gain enough creditor support for their plans.
China’s property market, once a key growth driver for the world’s second-largest economy, has been in a multi-year tailspin despite repeated government attempts to revive weak consumer demand.
Developers face deteriorating cash flow but their bondholders are resisting taking heftier losses on their investments, delaying negotiations between companies and creditors, restructuring advisers have said.
China South City’s shares were suspended from trading earlier in the day. Before the suspension, they were last at HK$0.107, down 1.8% from Friday. They peaked at HK$4.73 in 2014.
The shares will remain suspended until further notice, the company said in a statement.
The firm, around 30% held by Shenzhen government-owned SEZ Construction Development, defaulted on around HK$16 billion ($2.04 billion) in debt last year. It had total liabilities of HK$60.9 billion and total assets of HK$87.6 billion as of end-2024.
($1 = 7.8499 Hong Kong dollars)
(Reporting by John Biju in Bengaluru and Clare Jim in Hong Kong; Editing by Devika Syamnath)
