(Sept 20): Liquidators of China Evergrande Group, the world’s most indebted builder, are returning to a Hong Kong court as they attempt to wind up a subsidiary with key assets.

The Friday hearing at the Hong Kong High Court marks the parties’ first appearance before a judge since the liquidators instructed Evergrande to file a winding-up petition against its subsidiary CEG Holdings BVI Ltd earlier this month.

Evergrande’s court-approved liquidators are still navigating its complex structural maze and thorny legal questions about their reach in mainland jurisdictions where much of its assets are based. But the hearing would mark their strategy to target assets within its offshore units, and a successful CEG liquidation would represent a significant victory for them.

The unit owns nearly half of Evergrande Property Services Group, the builder’s property management business valued at HK$7.8 billion (RM4.2 billion), according to Bloomberg-compiled data. Evergrande Property Services Group was a much sought-after asset that was an integral part of its parent’s failed debt restructuring negotiation with creditors.

The court’s appointment of the liquidators for a similar role provisionally for the CEG case will enable them “to preserve the assets of the group so that the same can be realised for the benefit of the creditors and other stakeholders”, according to an Evergrande filing.

The liquidators — Edward Middleton and Tiffany Wong of Alvarez & Marsal Asia Ltd — filed their wind-up petition against CEG on Sept 12, roughly eight months after its parent was ordered to liquidate.

Since their appointment in January, they’ve taken several other steps to recoup at least a fraction what creditors are owed. They are trying to recover US$6 billion (RM25.16 billion) in dividends and remuneration given to seven individuals, including the developer’s founder Hui Ka Yan, according to a company filing in August.

They started legal actions earlier this year against Evergrande’s auditor PricewaterhouseCoopers LLP and PricewaterhouseCoopers Zhong Tian LLP, the global auditor’s mainland China arm.

The liquidators also began court proceedings against global commercial real estate services company CBRE Group Inc and advisory group Avista Valuation Advisory earlier this year over valuation reports they produced for Evergrande and its subsidiaries in 2018.

Evergrande received a liquidation order from a Hong Kong court in January, setting off a daunting process to carve up the biggest casualty of a property crisis that’s upending the world’s second-largest economy. It amassed more than US$300 billion of liabilities during China’s debt-fuelled property boom, before turning into the poster child of a market bust that shows few signs of ending.

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