UNITS of two high-profile Chinese companies received Hong Kong court orders to liquidate, the latest in a string of wind-up decisions in the city as creditors ramp up their legal efforts to recover funds.
Tianji Holding became the second key unit of defaulted builder China Evergrande Group to receive a wind-up order this year, following a Monday (Feb 17) ruling by Judge Linda Chan of Hong Kong’s High Court.
She also ordered the liquidation of an investment arm of HNA Group, the Chinese conglomerate that owns shares of Hainan Airlines and other overseas assets.
Distressed Chinese companies have faced a slew of court hearings in Hong Kong in recent months, as the pace of litigation quickens. The years-long property crisis left many firms with large piles of debt and those that are not able to amass enough support for restructuring proposals increasingly risk liquidation.
Tianji is clearly insolvent and should be placed into liquidation “as soon as possible” to allow an administrator to protect creditors, Chan said. Its parent, Evergrande itself, was ordered to liquidate in early 2024 – becoming the biggest casualty of the country’s prolonged property crisis – and its liquidators have been looking to seize its assets, including by filing the wind-up petition against Tianji.
Evergrande’s default in 2021 opened the floodgates to record debt failures by other builders, a shock to an economy that had relied on real estate to drive growth.
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The Tianji unit has over 200 subsidiaries incorporated in the British Virgin Islands, Hong Kong and mainland China. It is also a guarantor to some of the defaulted builder’s dollar notes. The total debt related to Tianji is about 37 billion yuan (S$6.8 billion), according to the unit’s legal representatives.
Chan’s decision to liquidate HNA Group (International) came after law firm Ashurst Hong Kong filed a winding-up petition against the unit in April.
“Creditors can be better served” with HNA Group (International) in liquidation, Chan said during the Monday hearing.
HNA Group (International) – formerly known as both HNA Group (Hong Kong) Holding and HNA Group International Headquarter (Hong Kong) – carried net liabilities of HK$23.7 billion as at Dec 2023, according to a financial report. The company has 17 subsidiaries, most of which are also investment arms, according to the report.
HNA Group was effectively seized in February 2020 by the provincial government of Hainan, the southern island province where it is based, after piling up one of China’s biggest corporate leverage loads. In 2022, the company reached an agreement with creditors on a debt-restructuring plan. BLOOMBERG
