Creditors pursue court action against developers Evergrande, Shimao amid housing slump

Creditors are tightening the screws on two of China’s largest property developers, pursuing court action to retrieve money owed as the nation’s home market struggles to rebound.

China Evergrande Property Services Group, the property management arm under China Evergrande, said its parent was ordered by a court in Guangzhou to repay 13.4 billion yuan (US$1.8 billion) in pledge guarantees on deposit certificates, according to a Hong Kong stock exchange filing late Friday night.

Evergrande Property’s legal proceedings against its debt-ridden parent began a year ago, after the developer revealed in 2022 that it had used 13.4 billion yuan belonging to the property unit as collateral for pledge guarantees.

The news came hours after CEG Holdings BVI, an offshore Evergrande unit that owns nearly half of Evergrande Property, was ordered to be wound up by a Hong Kong court, marking another legal victory for liquidators.

On the same day, Shimao Group, another major developer, said a liquidation petition against it was filed by CPYM Link Investment over 258 million yuan worth of cross-border loan guarantees. A hearing in the Hong Kong High Court is slated for March 19.