Country Garden: China property giant hit with winding-up petition

China’s biggest private property developer Country Garden is facing a winding-up petition, which has been filed in Hong Kong by a creditor.

A firm called Ever Credit Ltd filed the case for non-payment of a loan worth HK$1.6bn ($204.5m; £161.2m).

Country Garden, which defaulted on its overseas debt in October, says it will “resolutely oppose” the petition.

Last month, rival real estate giant China Evergrande was ordered to liquidate by a Hong Kong court.

The court has set the first hearing date for the petition on 17 May, Country Garden said in a statement to the Hong Kong Stock Exchange.

Ever Credit is a unit of Kingboard Holdings, a laminates maker and property investor.

Shares in Country Garden fell more than 10% in early Hong Kong trade following the announcement.

Country Garden did not immediately respond to a BBC request for comment.

“The filing of winding-up petition against Country Garden is not surprising for us,” Jason Sze from personal finance firm iFAST Financial told the BBC.

It comes a month after Evergrande, the world’s most indebted property developer, was ordered to be liquidated by a Hong Kong court.

The firm has been the poster child of China’s real estate crisis with more than $300bn (£236bn) of debt.

Liquidators have been appointed to look at Evergrande’s overall financial position and identify potential restructuring strategies.

That could include seizing and selling off assets, so that the proceeds can be used to repay outstanding debts.

However, the Chinese government may be reluctant to see work halt on property developments in China, where many ordinary would-be homeowners are waiting for apartments they have already paid for.

Mr Sze does not expect Country Garden to face a forced liquidation order like Evergrande.

“We believe that the company will launch an offshore debt restructuring plan as soon as possible to fend off the winding-up petition and settle the defaulted debts,” he said.

Problems in China’s property market are having a major impact as the sector accounts for a third of the economy.

The industry has been facing a major financial squeeze since 2021, when authorities introduced measures to curb the amount big real estate companies could borrow.

Since then several large property developers have defaulted on their debts in the last few years. – bbc.com