Evergrande Unit Tianji Ordered to Liquidate by HK Court

(Bloomberg) — A key unit of China Evergrande Group was ordered by a Hong Kong court to liquidate, the latest legal win for liquidators trying to access assets of the world’s most indebted developer.

Tianji Holding Ltd. is the second Evergrande unit to receive a wind-up order in as many months. The two rulings come about a year after Evergrande Group itself was liquidated, becoming the biggest casualty of the country’s prolonged property crisis. Tianji Holding is clearly insolvent, Judge Linda Chan of Hong Kong’s High Court said in her Monday ruling.

Evergrande’s court-approved liquidators are still navigating the company’s structural maze and legal questions about their reach in onshore jurisdictions, where much of the developer’s assets are located. 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.

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 ($5.1 billion), according to the unit’s legal representatives.

A Hong Kong court last month moved up Tianji’s hearing date, shortening an earlier respite. Evergrande liquidators Edward Middleton and Tiffany Wong of Alvarez & Marsal Asia Ltd. filed the winding-up petition against Tianji Holding in November. 

Separately, the liquidators are trying to recover $6 billion in dividends and remuneration given to seven individuals, including the developer’s founder Hui Ka Yan. They also began court proceedings against the builder’s auditors and real estate service companies over valuation reports they produced for Evergrande and its subsidiaries years ago.

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