Thea Arbar, CNBC Indonesia
Friday, 18/08/2023 21:50 WIB
Jakarta, CNBC Indonesia – Evergrande officially went bankrupt on Thursday (17/8/2023). The property giant from China went bankrupt after experiencing defaults of US$340 or around Rp.4,400 trillion in 2021.
The CNN International report said Evergrande filed for Chapter 15 bankruptcy protection, which allows United States (US) courts to intervene when bankruptcy cases involve other countries.
For information, Chapter 15 bankruptcy is intended to help promote cooperation between US courts, debtors, and the courts of other countries involved in cross-border bankruptcy proceedings.
Get to know Evergrande
Long before going bankrupt, Evergrande was one of the three biggest developers in China, with a significant footprint.
Evergrande was founded by entrepreneur Hui Ka Yan in 1996 in Guangzhou, southern China. Previously this company was known as the Gengda Group. Since then, Evergrande has had more than 1,300 real estate projects in more than 280 cities in China.
Following its success, the company went on to own several non-real estate businesses, including an electric vehicle business, a healthcare business and an amusement park business. Evergrande even has one of the biggest soccer teams in China, Guangzhou FC.
Businessman Hui was once the richest man in Asia. His fortune plummeted after the Evergrande case, but as of 2021 he still has a personal fortune of more than US$10 billion or £7.3 billion.
Pictured: Vehicles pass by the unfinished residential buildings of Evergrande Oasis, a residential complex developed by Evergrande Group, in Luoyang, China September 16, 2021. (REUTERS/Carlos Garcia Rawlins)
Vehicles drive past unfinished residential buildings from the Evergrande Oasis, a housing complex developed by Evergrande Group, in Luoyang, China September 16, 2021. Picture taken September 16, 2021. REUTERS/Carlos Garcia Rawlins
Called Jokowi
The Evergrande default case was also mentioned by President Joko Widodo (Jokowi). Although he did not mention the names of the companies directly, the President said that there were Chinese companies that had Rp.4,400 trillion in debt.
“We know that in the PRC (China) there are large property companies that have collapsed whose debts exceed our state budget by up to IDR 4,400 trillion,” Jokowi said at the Grand Ballroom, Sheraton Hotel, South Jakarta, last Wednesday in early August.
“Don’t be applauded. The debt is Rp. 4,400 trillion. Is there anyone here whose debt is up to that? Once again, be careful about this,” Jokowi added.
Not The Only One: Kaisa & Country Garden
Evergrande is not the only company that has defaulted and ended up going bankrupt. Since the company’s collapse, several other major developers in China have defaulted on their debts.
One of them is the Kaisa Group Holdings company, which since 2021 has been threatened with being unable to pay debts and going bankrupt.
The company listed on the Hong Kong stock exchange is said to be unlikely to meet the target debt deadline of US$ 400 million or Rp 200.78 billion. Kaisa also suspended stock trading in 2021.
Kaisa is the 27th largest real estate in Bamboo Curtain. But the company was reported as one of the country’s most indebted. Recently, another Chinese real estate giant, Country Garden, was also predicted to follow Evergrande’s footsteps.
The largest non-state-owned developer by sale was reported to have missed two dollar bond coupon payments on August 1, worth a total of US$22.5 million (Rp 342 billion). The bonds in question are those maturing in February 2026 and August 2030.
“Improving capital arrangements to ensure legal rights to debt,” said the official statement of the company, which has total liabilities of US$194 billion by the end of 2022 and large exposure in China’s low-tier cities.
As a result, Country Garden’s shares listed in Hong Kong collapsed at the beginning of August. Negative sentiment also occurred in a number of other non-BUMN developer stocks such as Longfor.
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(tfa/wur)
2023-08-18 14:50:00
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