According to a recent stock filing by the petitioner, a significant investor, Vanward, a Shenzhen-listed electric appliance manufacturer, has taken legal action to liquidate a major unit of the financially strained property developer China Evergrande. The petition, filed on Wednesday, revolves around a dispute with Evergrande’s unit Guangzhou Kailong Real Estate concerning an investment amounting to 200 million yuan ($27.9 million).
The case is currently under review by a court in Guangzhou, a prominent city in southern China, as indicated in the filing submitted by Vanward. Notably, Kailong holds a crucial position within Evergrande, controlling a substantial 60.3% stake in Hengda Real Estate, the flagship property entity of Evergrande in mainland China, according to business registry database Qichacha.
Vanward’s legal move follows a previous ruling in December 2022 by a Shenzhen court, which mandated Kailong to repay the investment along with accumulated interest and legal expenses. Despite the ruling, Kailong has not adhered to the directive, as disclosed by Vanward in the filing.
In a separate development, Evergrande’s electric vehicle unit announced that a Chinese court had decreed that two of its subsidiaries must undergo bankruptcy proceedings and subsequent restructuring. This adds to the mounting legal challenges faced by Evergrande.
Earlier in January, a Hong Kong court issued a directive for the liquidation of Evergrande, once a leading property developer in China, after the company failed to present a satisfactory restructuring plan for its substantial $23 billion offshore debt.
The overarching financial picture of Evergrande remains concerning, with the company grappling with a colossal debt burden exceeding $300 billion. The ongoing legal battles and financial woes continue to cast a shadow over the future prospects of the embattled property giant.
