Next, the search for an insolvency administrator for Evergrande begins. This sells the company’s assets in order to pay the debts to the creditors. Incidentally, the fact that the creditors went to court in Hong Kong was because Evergrande is listed on the stock exchange there. However, it is unclear whether the ruling will be implemented in mainland China, where much of the company’s assets are located and a different legal system prevails. It could be difficult for an administrator to make personnel decisions at the company’s official headquarters in Guangzhou, southern China.
For creditors, the prospects of getting much of their money back could be rather poor. Another possibility would be for the administrator to develop a new plan to restructure the debts with foreign lenders. However, it would have to be clear that the company still has enough assets, or a “white knight” would have to emerge, i.e. an investor with the necessary money.