A bankruptcy filing against a Guangzhou-based unit of collapsed developer China Evergrande has been accepted by a mainland China court, according to a filing with the Hong Kong stock exchange.
A court in the southeastern Chinese city accepted a bankruptcy liquidation application filed against Guangzhou Kailong Real Estate, an indirect wholly owned subsidiary of the world’s most indebted developer, on August 9, the liquidators of Evergrande said in the filing on Monday.
The intermediate court of Guangzhou will convene a meeting of the first creditors of Guangzhou Kailong on November 14. The “creditors of Guangzhou Kailong are requested to declare their claims to Guangzhou Kailong’s bankruptcy administrator” before November 7, the filing said.
The liquidators gave no other details about the bankruptcy application, according to the disclosure.
Earlier this month, the liquidators said they had made “modest realisations of assets” of Evergrande, but pointed out that the company’s “liquidity and other internal resources remain limited” amid its “level of indebtedness and the challenges faced by the group’s business and operations”.
Trading of Evergrande’s shares has been suspended since January 29, and the liquidators said that “in the absence of substantial new investment into the company, the liquidators do not currently see a path to a restructuring” that would enable the company to resume trading of its shares.
The latest quarterly report from the liquidators shows the continued depressing state of affairs at Evergrande, months after the China Securities Regulatory Commission slapped the firm with a 4.2 billion yuan (US$586 million) fine and barred founder Hui Ka-yan from the capital markets for life after the developer was found inflating its sales by 564 billion yuan in the years preceding its eventual collapse.
The liquidators’ assessment comes just days after they started legal action against PwC and its mainland unit PwC Zhong Tian, accusing the auditor of “negligence” and “misrepresentation” in its work for Evergrande in 2017 and the first half of 2018.
China’s Ministry of Finance and the Hong Kong Accounting and Financial Reporting Council are assisting each other in their separate investigations of PwC’s audit work for Evergrande, based on an agreement signed between the two regulators in 2019.
In January, a Hong Kong High Court ordered the liquidation of Evergrande after finding that it could not bring forward a concrete restructuring proposal for its US$328 billion in liabilities after a year and half of hearings, according to the court ruling.
Evergrande has more than 1,200 projects at different stages of progress, ranging from near completion to under construction, according to its 2022 annual report.
