Country Garden Avoids Liquidation: What Does This Signify for China’s Property Market?
A Hong Kong court recently dismissed a petition to liquidate Chinese property giant Country Garden, a development that offers a temporary reprieve for the heavily indebted developer. This decision, coming after the company announced the restructuring of its offshore debt, signals a complex moment for China’s real estate sector, which has been grappling with a significant financial squeeze since 2021.
The Weight of Debt and Restructuring Efforts
Country Garden, once China’s largest real estate developer, found itself facing a total liability of ¥885.4 billion (approximately $128 billion USD) as of June 2025. The company’s struggles mirror those of other industry players like Evergrande, Vanke, and Kaisa, all burdened by protracted debt issues. The dismissal of the liquidation petition, initiated by creditor Ever Credit Limited, followed the approval of Country Garden’s restructuring scheme by the court in December 2025, with the restructuring becoming effective on December 30, 2025.
The restructuring involved approximately US$17.7 billion of offshore debt, advised by law firm Linklaters, marking one of the largest and most complex offshore restructurings by a Chinese issuer. Despite this, shares continue to trade near all-time lows, having only resumed trading in January 2025 after a nine-month suspension.
A Sector Under Pressure: The Broader Context
Country Garden’s difficulties are not isolated. The Chinese government introduced measures in 2021 to curb borrowing by large developers, triggering a cascade of defaults. Several major property developers, including Evergrande and Country Garden, have since struggled to meet their financial obligations. This crisis impacts the broader economy, as the property sector accounts for around a third of China’s economic activity.
The situation with Evergrande, which was ordered to liquidate by a Hong Kong court in January, highlights the severity of the issues. The dismissal of the petition against Country Garden, however, suggests a potential shift in approach, with courts potentially favoring restructuring over immediate liquidation.
What’s Next for Chinese Property Developers?
The future of Chinese property developers remains uncertain. While restructuring offers a pathway to avoid immediate collapse, significant challenges remain. The operating environment is described as “increasingly complex” due to ongoing volatility in the industry. Developers will likely focus on boosting cash flow and slashing debt over the next two years.
Beijing has announced measures to boost housing demand, but the effectiveness of these policies remains to be seen. The success of Country Garden’s restructuring could set a precedent for other developers facing similar difficulties, potentially influencing future court decisions and restructuring strategies.
Did you grasp? Country Garden’s total liabilities reached ¥885.4 billion as of June 2025, highlighting the scale of the financial challenges facing the company.
FAQ
Q: What does the court’s decision mean for Country Garden’s creditors?
A: The dismissal of the liquidation petition allows Country Garden to continue with its restructuring plan, potentially offering creditors a better recovery than immediate liquidation.
Q: Is the Chinese property market still in crisis?
A: Yes, the market continues to face significant challenges, including high debt levels and declining demand. However, the government is implementing measures to stabilize the sector.
Q: What is a winding-up petition?
A: A winding-up petition is a legal process initiated by a creditor to force a company into liquidation, meaning its assets are sold to pay off debts.
Pro Tip: Maintain a close watch on government policies and announcements related to the property sector, as these can significantly impact the market’s trajectory.
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