Dexin was ordered to liquidate by a Hong Kong court amid a downturn in China's property market.
Dexin China Holdings, a developer known for its residential and commercial buildings in the affluent Yangtze River Delta region, was ordered to wind up by a Hong Kong court. The decision, issued on Tuesday, comes three months after China Construction Bank (Asia) filed a petition and roughly eighteen months following the company’s default on its financial obligations.
According to a Bloomberg report, Dexin's liquidation order arrives amidst an ongoing downturn in China's property market that has seen a string of developers face court-ordered liquidation. The list includes prominent names like Jiayuan International Group Ltd, Yango Group Co.'s offshore unit, Sinic Holdings Group Co., and the heavily indebted China Evergrande Group. These events highlight the lingering distress in the sector, despite the Chinese government's efforts to support industry recovery.
The Zhejiang-based developer, Dexin, defaulted in December 2022 by failing to pay off 9.95% senior notes due that year, amounting to a principal of $350 million. "That’s a really long time ago," stated the legal representative of China Construction Bank during the court proceedings. Efforts by Dexin's lawyer to highlight the opposition of a minority of creditors and ongoing negotiation attempts did not prevent the issuance of the liquidation order.
High Court Judge Linda Chan delivered the verdict in less than 20 minutes and announced her intention to hand down a judgment within a week. Dexin reported total liabilities of 64.4 billion yuan ($8.88 billion) by the end of 2023.
Further hearings are anticipated in the near future for other major developers, including Country Garden Holdings Co. and Shimao Group Holdings, as they seek to convince the courts of their progress in restructuring debt.
The recent news has also impacted Asian stock markets, with indices in Hong Kong and China reporting losses. This event adds to the broader narrative of a property market downturn that began in 2021, characterized by defaults, stalled construction projects, and declining home sales, which have all contributed to diminished confidence in the sector's outlook.
