The China Evergrande Group, which has recently caught the global attention because of its astronomically high debt and the concerns of its collapse having a widespread impact on the global economy, has been sued by two Hong Kong property agencies over commissions unpaid to the agencies, according to reports based on a court filing
This has added on to the already immense pressure on Evergrande which is struggling to raise funds and avert a collapse.
According to reports based on the court filing, a case was filed aginast Evergrande in September by Centaline seeking to recover HK$3.1 million ($398,196) in unpaid commissions. Midland Holdings is claiming HK$43.45 million in unpaid commissions for two Hong Kong developments, according to a report by the South China Morning Post newspaper.
A lawsuit against Evergrande in a Guangzhou court in southern China, has also been filed by Centaline China, according to a report by the news agency Reuters, demanding hundreds of millions of yuan it claims as due.
Centaline confirmed to Reuters that it filed a claim in Hong Kong last month, but declined to elaborate. Midland declined to comment, citing the ongoing legal proceedings. Evergrande did not respond immediately to a request for comment.
Hong Kong’s exposure to debt-laden developer China Evergrande is “very minimal,” at 0.05 percent of banking assets, or HK$14 billion ($1.79 billion), and will not pose any systemic risks, according to the newspaper, citing the city’s Financial Secretary.
Evergrande has vowed to repay its suppliers and contractors in mainland China as soon as possible, in some cases offering apartments or other real estate assets, as construction at many of its sites have halted because of delayed payments.
With $305 billion in liabilities, Evergrande has raised concerns that its cash crunch will spread through China’s financial system and reverberate globally, a concern that has been alleviated by the Chinese central bank’s pledge last week to protect homebuyers’ interests. more info
Concerns about Chinese property developer defaults triggered a sell-off in their shares and bonds on Tuesday, with fresh credit rating downgrades and uncertainty about the fate of cash-strapped China Evergrande Group sapping investor sentiment. more info
It missed coupon payments on two-dollar bond tranches last month and is scrambling to sell assets to pay creditors, prioritising repayment to onshore lenders in the last fiscal year.
(Adapted from EconomicTimes.com)