China's Country Garden faces liquidation petition amid financial challenges

China's largest private property developer, Country Garden Holdings, is grappling with a liquidation petition for failing to repay a term loan facility worth HK$1.6 billion ($204.5 million), the company disclosed on Wednesday.

The petition was filed by Ever Credit Limited, a creditor and subsidiary of Kingboard Holdings. A court hearing for the liquidation has been scheduled for May 17.

This development follows the liquidation order against China Evergrande Group, the world's most indebted property developer, in late January, signalling ongoing financial challenges in the Chinese property sector.

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Country Garden addressed the situation in a statement, saying that it would "proactively communicate and work with its offshore creditors on its restructuring plan".

The company aims to announce the terms of the restructuring plan to the market as soon as practicable.

Despite the challenges posed by the liquidation petition, Country Garden assured stakeholders that it would not significantly impact the guaranteed delivery of buildings, normal operations, and the overall restructuring of overseas debts.

Kingboard, in October, initiated legal action against Country Garden, becoming one of the first listed companies to take such action.

A unit of Kingboard, owed HK$1.6 billion ($204 million), issued a statutory demand seeking repayment.

In response to the financial strain, Country Garden has enlisted the services of KPMG and law firm Sidley Austin as advisers.

Their mandate is to examine the company's capital structure and liquidity position and devise a comprehensive solution to address the financial challenges.

The October scenario saw Country Garden missing a $15 million bond coupon repayment, prompting the formation of ad hoc bondholder groups consisting of international and fund manager investors.

(With inputs from Reuters)