Can investors get their money back after the collapse of "landlord" Evergrande?

China Evergrande, once one of China’s largest real estate companies, has struggled with a debt crisis for years, but has ultimately been forced into liquidation.

Evergrande's foreign creditors failed to reach a restructuring deal after 11 hours of talks, the Wall Street Journal reported.

According to experts, after the liquidation order is accepted by the Chinese court, Evergrande will fall into the hands of liquidators and will try to sell off the group's assets to pay creditors.

Liquidators may propose new debt restructuring plans to foreign creditors. For years, Evergrande has used investor deposits for new projects to finance existing construction projects.

Much of Evergrande’s $300 billion in debt is made up of investor deposits for new apartments, and experts are unclear whether they will be given priority over foreign creditors in the liquidation process.

Logo on the Evergrande Center building in Shanghai (Photo: AFP).

Evergrande's crisis has also raised concerns about contagion effects in other sectors of the world's No. 2 economy .

Real estate has been China's main growth engine over the past two decades, helping Beijing achieve strong double-digit economic growth.

However, in recent years, many real estate giants have been forced to go bankrupt. In 2023, new home sales from China's 100 largest real estate companies fell by more than a third to just 451.3 billion yuan.

Faced with that situation, Chinese policymakers have had to make efforts to prevent a debt crisis.

Last week, the People's Bank of China (PBoC) and the Ministry of Finance announced measures to boost liquidity for real estate companies. The measures will be effective until the end of 2024 and help ease the liquidity crisis that has plagued China's property giants.

Source: https://dantri.com.vn/bat-dong-san/nha-dau-tu-lieu-co-the-lay-lai-tien-sau-khi-chua-chom-evergrande-sup-do-20240130192836292.htm