Aerial photo showing a Country Garden residential area in Nanjing, east China's Jiangsu province, on February 5, 2024. Future Publishing via Getty Images
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China Country garden holdings said on Wednesday it had received a liquidation petition filed by one of its creditors, deepening concerns about the country's beleaguered real estate sector.
The troubled real estate developer said in a regulatory filing received a “liquidation” petition dated February 27 filed by creditor Ever Credit Limited.
The petition was issued over non-payment of a loan worth HK$1.6 billion ($204.4 million).
Country Garden said it will “vigorously” oppose the petition and seek legal action to do so. A court hearing will take place on May 17.
The company's Hong Kong-listed shares fell more than 12%, much more than the 0.27% decline in the broader period. Hang Seng Index.
Country Garden said it intends to “proactively communicate” and work with its offshore creditors on its restructuring plan. She noted that she does not expect the petition to have a substantial impact on her offshore restructuring process.
The debt-laden property developer's upgrade comes as authorities struggle to boost confidence in the property market.
The International Monetary Fund said earlier this month that demand for new housing in China will fall by around 50% over the next decade.
At the end of January, the real estate giant China Evergrande A Hong Kong court ordered its liquidation, renewing concerns about China's struggling real estate sector. Still, concerns about an overflow appear to have eased as Evergrande's problems appear contained.
China's real estate sector has historically been the foundation of the country's economy and accounts for a large portion of the gross domestic product. The industry has grown rapidly over the past few decades, fueled by debt. But these accumulations of debt have weighed on the balance sheets, leading to defaults to the main developers.
Companies like Country Garden and Evergrande have struggled to pay their debt obligations and are now involved in protracted debt restructuring processes.
