Evergrande unit faces liquidation petition in China

An investor in China has petitioned a court to liquidate a significant unit of the financially troubled property developer China Evergrande.

The petitioner, Vanward, a Shenzhen-listed electric appliance manufacturer, is in a dispute with Evergrande’s unit Guangzhou Kailong Real Estate over a 200-million-yuan investment. The case is currently under review by a court in Guangzhou.

Evergrande, in a statement to Reuters, downplayed the potential impact of Kailong’s liquidation.

The company clarified that Kailong is a holding platform for its mainland China flagship property entity, Hengda Real Estate, and doesn’t directly operate any property projects.

Evergrande claims Kailong’s potential liquidation wouldn’t affect Hengda’s normal operations, including completion and delivery of homes to buyers.

However, public records show Kailong holds a controlling 60.3 per cent stake in Hengda. This raises questions about the potential long-term implications for Evergrande’s mainland operations if the liquidation petition is successful.

Attribution: Reuters