When Hong Kong judge Linda Chan ordered China Evergrande into liquidation on Monday, she opened a critical new phase in the slow-motion collapse of the world’s most indebted property developer — and set up a high-profile test of the reach of the former British colony’s courts.
How the winding up of the company’s Hong Kong entity proceeds, and how much international investors can recover of the tens of billions of dollars they invested in Evergrande, will depend mainly on the attitude of authorities and courts across the border in mainland China.
Almost all of the company’s homebuilding activity takes place in the Chinese mainland, where most of its more than $300bn in liabilities are also owed and a property slowdown has become one of the government’s most pressing challenges.