China: Real estate developer Country Garden targeted by liquidation petition

(Reuters) – Country Garden Holdings, China’s largest private property developer, said on Wednesday it was subject to a liquidation petition for failing to repay a $205 million loan, jeopardizing plans to restructuring of its debt and Beijing’s efforts to restore confidence in the real estate sector.

In a document sent to the Hong Kong Stock Exchange regulator, the group indicated that it would “resolutely” oppose the request, filed by one of its creditors, Ever Credit Limited, a subsidiary of Kingboard Holdings.

A court hearing has been scheduled for May 17.

There was no immediate comment from Kingboard.

Shares of Country Garden fell more than 12% in Hong Kong trading.

This affair is likely to fuel the concerns of buyers and creditors about the crisis in the Chinese real estate sector, at a time when politicians are striving to restore confidence in an industry which represents a quarter of the gross domestic product (GDP) of the country.

A liquidation of Country Garden would have the effect of exacerbating the crisis in the sector, weighing on its creditors and casting a shadow not only on the recovery of the real estate market but also on that of the Chinese economy as a whole.

“The drastic measures taken by a single creditor will not have a significant impact on our company’s secured deliveries, normal operations and the overall offshore debt restructuring,” Country Garden said in a statement to Reuters.

The request against Country Garden comes after a Hong Kong court ordered at the end of January the liquidation of the developer China Evergrande Group, heavily in debt and engaged in a restructuring process which could extend over ten years.

(Written by Scott Murdoch in Sydney and Clare Jim in Hong Kong; French version Jean Terzian)

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