An aerial photo shows a residential area at Country Garden in Nanjing, east China's Jiangsu Province, on February 5, 2024. Future publication via Getty Images
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China Country Garden Holdings The company said on Wednesday that it had received a liquidation request submitted by one of its creditors, deepening concerns about the country's beleaguered real estate sector.
The troubled property developer said in a regulatory filing that it received a “liquidation” petition dated February 27 filed by creditor Ever Credit Limited.
The petition was issued for failure to repay a loan worth HK$1.6 billion ($204.4 million).
Country Garden said it would “vigorously” oppose the petition and would seek legal action to do so. The court hearing is scheduled for May 17.
The Hong Kong-listed company's shares fell more than 12%, much more than the broader decline of 0.27%. Hang Seng Index.
Country Garden said it intends to “proactively communicate” and work with its external creditors on its restructuring plan. It indicated that it does not expect the petition to have a material impact on the external restructuring process.
The debt-laden real estate developer's update comes as authorities struggle to boost confidence in the real estate market.
The International Monetary Fund said earlier this month that demand for new housing in China is expected to fall by about 50% over the next decade.
In late January, the real estate giant China Evergrande A Hong Kong court ordered the liquidation, renewing concerns about China's faltering real estate sector. However, concerns about the spread of the virus appear to have diminished as Evergrande's issues have been contained.
China's real estate sector has historically been a cornerstone of the country's economy, accounting for a large share of GDP. The industry has grown rapidly over the past few decades, driven by debt. But these piles of debt have taken a toll on balance sheets, leading to defaults for major developers.
Companies like Country Garden and Evergrande have struggled to repay their debt obligations and are now embroiled in lengthy debt restructurings.
