Builder China South City ordered to liquidate by Hong Kong court
The ruling from judge Linda Chan came after the liquidation petitioner asked for an immediate wind-up order. China South City asked the court for 'one final chance', but Chan said that no significant progress had been made on the company's restructuring proposal.
The liquidation order shows how China's years-long property crisis continues to shake one-time giants of the real estate industry. Despite government efforts to prop up the ailing sector, home sales are still weak, making any near-term recovery unlikely. Even UBS Group, which had been among the few firms predicting a recovery, is now expecting a delay unless Beijing introduces additional stimulus measures.
Hong Kong's courts have issued at least six wind-up orders for Chinese developers since the crisis began in 2021, including one for Evergrande, whose liquidation was one of the most complicated given its asset size and the number of stakeholders.
China South City had been at odds with creditors over several issues. During a hearing in May, creditors said they wanted Shenzhen SEZ Construction and Development Group, China South City's biggest shareholder, to play a larger role in the debt talks. They were specifically seeking access to the Shenzhen SEZ Construction's chairman, Li Wenxiong, who serves as a co-chairman of China South City.
China South City's ownership structure is similar to that of China Vanke, a major Chinese developer, which received state support in January, led by local authorities in the company's hometown of Shenzhen.
China South City had total liabilities of about HK$60.9 billion as at Dec 31, 2024, according to its annual report.
The company's shares were suspended from trading on Monday (Aug 11) in Hong Kong. China South City defaulted on its dollar notes more than a year ago. These bonds are still trading at around 25 US cents as at Monday morning, Bloomberg-compiled data show.
The winding-up petition against China South City was filed by Citicorp International, which is the trustee of the developer's US dollar bonds. BLOOMBERG
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