Chinese property developer Evergrande spared from liquidation as debts blow out to $498 billion

The embattled property juggernaut has once again escaped a forced closure two years after becoming the most indebted company in the world.

Embattled Chinese property juggernaut Evergrande has once again wriggled its way out of shutting down completely two years after becoming the most indebted company in the world.

On Monday local time, many thought the property developer was facing its final reckoning at a Hong Kong bankruptcy court where it was widely expected the business would be ordered to go into liquidation after an 18-month long legal battle.

But in a surprise move, the judge, Linda Chan, granted the business a two-month extension to come up with a debt plan to pay back foreign investors owed billions of dollars.

Evergrande is now due in court again on January 29.

In 2021, the property developer earned the unwelcome title of the world’s most indebted real estate firm after getting into debt to the tune of $A408 billion. This figure has since risen to $A$498 billion.

This also sparked China’s worst ever property crisis, generating fears of a domino effect in the property sector locally and abroad.

Heavily indebted Chinese property giant Evergrande has until late January to put together a restructuring plan, a Hong Kong court ruled, extending a deadline that could lead to its liquidation. Picture: AFP / China OUT

The judge granted the extension in part because the petitioning creditor had changed its mind and no longer wanted to wind the company up into liquidation.

Lawyers representing that creditor were informed 15 minutes beforehand about the change of heart.

This caused some “confusion” at the hearing, according to The New York Times, because other creditors had also joined onto the case and wanted to forge ahead with the liquidation.

In late October, the judge marked December 4 as the deadline for the debt plan before appointing independent liquidators from major accounting firm KPMG.

Hui Ka Yan, chairman of China Evergrande Group, has lost most of his wealth. Photographer: Paul Yeung/Bloomberg

In 2021 and 2022 Evergrande lost a combined 581.9 billion yuan (A$118 billion).

The company reported losses of 476 billion yuan (A$97 billion) in 2021 and 106 billion yuan (A$21 billion) in 2022.

The same document, released in a Monday (local time) stock exchange filing, also revealed that Evergrande’s total debt position has increased drastically.

By the end of last year, it now owes an eye-watering 2.437 trillion yuan (A$498 billion).

CNN noted that this amount equated to about two per cent of China’s entire GDP.

In January, news.com.au reported that Evergrande chairman Hui Ka Yan has seen his wealth plummet by 93 per cent in the wake of the crisis.

He lost a staggering $US39 billion ($A56 billion) in just two years.

At the company’s peak, Hui was the second-richest person in Asia, according to Bloomberg Billionaires Index, which listed him as having a fortune of $US42 billion ($A60 billion). Now, there’s just $US3 billion ($A4.3 billion) left.

Chinese creditors have sued Evergrande for more than $US13 billion in allegedly overdue payments.

A Chinese court has accepted a whopping 367 cases against Evergrande.