China’s property crisis shows no sign of abating after Country Garden, the country’s largest property developer, was hit by a winding up petition from a creditor.
The liquidation petition was filed by Ever Credit Ltd, a unit of listed firm Kingboard Holdings, for the non-payment of a $205m loan.
The first hearing date has been set for 17 May. Country Garden said that it will “resolutely oppose” the petition.
“The company intends to continue to proactively communicate and work with its offshore creditors on its restructuring plan, with the objective of announcing terms to the market as soon as practicable,” it said.
Shares in Country Garden lost over 12 per cent on Wednesday. Over the past year its shares are down just over 70 per cent.
The news comes after fellow property developer Evergrande was ordered to liquidate last month after it was unable to reach a restructuring deal.
Country Garden’s latest woes will add concerns to a sector which has been engulfed in crisis since 2021, when the Chinese government enforced policies designed to reduce leverage in the heavily indebted sector.
The intervention, which was designed to deflate the bubble, was too aggressive, slashing demand and leaving developers without a sufficient income stream to pay off their enormous debts.
Country Garden was previously seen as one of the most financially secure developers, but back in October it was reported to have missed payments on international bonds.
The sector is immensely important for the Chinese economy, making up around a quarter of GDP. The crisis in the real estate sector has filtered through into the broader economy, with growth slowing and deflationary pressures building.