On the evening of January 26th,Publish two…
For depositsNotification by the board of directors of enforcementThe company’s wholly-owned subsidiary has filed a lawsuit with the Guangzhou Intermediate People’s Court.
Due to the company’s failure to provide sufficient supporting materials for bad debt losses, there is a total risk of underpayment of corporate income tax in 2021 and 2022 of about 650 million yuan and related late fees.
In addition, on January 26, the website of the Hong Kong Judiciary revealed that the Hong Kong High Court will hold a hearing at 9:30 on January 29Group winding-up petition hearing. Prior to this, eight applications for adjournment of petition hearings had been filed.
Alert the risk of underpayment of taxes
According to the voluntary announcement on the evening of January 26, three subsidiaries of the company, namely Jinbi Property Co., Ltd., Hengda Hengkang Property Co., Ltd. (referred to as "Hengda Hengkang") and Guangzhou Jinbi Huafu Property Co., Ltd. (referred to as "Jinbi Huafu"), have received a notice from the competent tax authorities that the above three companies confirmed the loss of bad debts and made partial pre-tax deductions for the execution of the pledge of 13.40 billion yuan in 2021, 2022 and 2023, and failed to provide sufficient supporting materials for the loss of bad debts. There is a total risk of underpayment of corporate income tax in 2021 and 2022 and related late fees of about 650 million yuan. The notice requires the company and three subsidiaries to correct their declarations.
Evergrande Property said that the company has fully reflected the taxes and fees payable in the profit and loss statements for 2021 and 2022, and this correction does not involve retrospective adjustment of previous financial data and does not affect the relevant annual net assets and profits.
File a lawsuit in court
According to Hengda Property’s announcement, a wholly-owned subsidiary of the company has filed seven lawsuits with the Guangzhou Intermediate People’s Court regarding the enforcement of the deposit pledge.
Hengda Hengkang 1.70 billion yuan deposit certificate pledge guarantee wasThe company’s wholly-owned subsidiary Hengda Hengkang has filed a lawsuit against Zhiluo Sheng (Guangzhou) Agriculture Co., Ltd. (referred to as "Guangzhou Zhiluo Sheng"), Guangzhou Chenxiyu Agricultural Technology Co., Ltd., Guangzhou Fragrant Berry Sweet Agricultural Technology Co., Ltd., Shenzhen Ruiyida Industrial Co., Ltd., Hengda Real Estate and (Hengda Hengkang 1.70 billion yuan responsible party), requiring Hengda Hengkang 1.70 billion yuan responsible party to repay 1.70 billion yuan and provisional interest of about 144 million yuan.
In connection with the enforcement of the 1 billion deposit certificate pledge guarantee by Guangzhou Jinbi Hengying Property Services Co., Ltd. (referred to as "Jinbi Hengying"), Jinbi Hengying, a wholly-owned subsidiary of the company, has filed a lawsuit against Guangzhou Mai Cai Meirui Biotechnology Co., Ltd. (referred to as "Guangzhou Mai Cai Meirui"), Guangdong Jingqi Industrial Co., Ltd., Hengda Real Estate and China Hengda (Jinbi Hengying 1 billion responsible party), demanding that Jinbi Hengying 1 billion responsible party repay the amount of 1 billion yuan and the provisional interest of about 84.6917 million yuan.
In connection with the enforcement of Hengda Hengkang’s 1 billion yuan deposit certificate pledge guarantee, Hengda Hengkang has filed a lawsuit against Guangzhou Zhiluo Sheng, Guangzhou Mai Cai Meirui, Guangzhou Qianfenghui Agricultural Technology Co., Ltd., Guangzhou Jinsui Agricultural Technology Co., Ltd., Guangzhou Xinyuan Investment Co., Ltd. (referred to as "Guangzhou Xinyuan"), Hengda Real Estate and China Hengda (Hengda Hengkang 1 billion yuan responsible party), demanding that Hengda Hengkang 1 billion yuan responsible party repay 1 billion yuan and provisional interest of about 76.0719 million yuan.
In connection with the bank-enforced recovery of approximately 2 billion yuan of the deposit certificate pledge guarantee of Jinbi Hengkang Property (Beijing) Co., Ltd. (referred to as "Jinbi Hengkang"), Jinbi Hengkang, a wholly-owned subsidiary of the company, has filed a lawsuit against Tianjin Hushang Trading Co., Ltd., Tianjin Junwei Industrial Co., Ltd., Guangzhou Xinyuan, Evergrande Real Estate and China Evergrande (Jinbi Hengkang 2 billion responsible party), demanding that Jinbi Hengkang 2 billion responsible party repay about 2 billion yuan and provisional interest about 153 million yuan.
In relation to the recovery of the 700 million yuan deposit certificate pledge guarantee enforced by the bank, Jinbi Hengying has filed a lawsuit against Shenzhen Runjintong Supply Chain Co., Ltd., Shenzhen Shengjiazhe Trading Co., Ltd., Guangzhou Xinyuan, Evergrande Real Estate and China Evergrande (Jinbi Hengying 700 million yuan responsible party), demanding that Jinbi Hengying 700 million yuan responsible party repay 700 million yuan and the provisional interest is about 53.4985 million yuan.
In relation to the recovery of about 2.70 billion yuan of the deposit certificate pledge guarantee by the bank, Jinbi Huafu, a wholly-owned subsidiary of the company, has sued Guangzhou Tongfu Agriculture Co., Ltd., Shanghai Panlong International Trade Co., Ltd., Guangdong Minhui Supply Chain Management Co., Ltd., Shenzhen Bohong Supply Chain Co., Ltd., Guangzhou Juhong Agricultural Technology Co., Ltd., Guangzhou Xinyuan, Hengda Real Estate and China Hengda (Jinbi Huafu 2.70 billion responsible party), demanding that Jinbi Huafu 2.70 billion responsible party repay about 2.70 billion yuan and temporarily accrue interest about 206 million yuan.
In relation to the recovery of the 2.30 billion deposit certificate pledge guarantee enforced by the bank in Guangzhou Jinbi Family Property Services Co., Ltd. (referred to as Jinbi Family), Jinbi Family, a wholly-owned subsidiary of the company, has filed a lawsuit against Guangzhou Jiacheng Zhixing Trading Co., Ltd., Zhejiang Tongxin Trading Co., Ltd., Shanghai Zhouhang International Trade Co., Ltd., Dalian Jiuyi Chunqiu Trading Co., Ltd., Guangzhou Xinyuan, Hengda Real Estate and China Hengda (Jinbi Family 2.30 billion responsible party), requiring Jinbi Family 2.30 billion responsible party to repay 2.30 billion yuan and the provisional interest of about 174 million yuan.
Evergrande Property has received the notice of formal acceptance of the case by the court on January 25, 2024. As Guangdong Jingqi Industrial Co., Ltd., Shenzhen Runjintong Supply Chain Co., Ltd. and Guangzhou Tongfu Agriculture Co., Ltd. have been cancelled respectively, the company will consider additional litigation against the shareholders of the companies concerned. According to the analysis of the board of directors and its legal advisors, the litigation will not have a material adverse impact on the company’s daily operations. The company will continue to make every effort to recover the relevant deposit pledges and will make further announcements in due course on any material progress of the above litigation or any other actions the company will take.
Facing a winding-up petition hearing
Separately, on January 26, the Hong Kong judiciary’s website revealed that the High Court would hold a hearing on the winding-up petition against China Evergrande Group at 9.30pm on January 29. Justice Chan Ching-fen will hold a hearing on a potential regulatory order at 2.30pm on January 29. Such a regulatory order would mean that the court would oversee the winding-up process, which could include the appointment of a liquidator.
Prior to this, China Evergrande had submitted eight applications for adjournment of the hearing of petitions. On June 28, 2022, China Evergrande announced that Top Shine Global had filed a winding-up petition against the company with the Hong Kong High Court on June 24, 2022, involving a debt amount of approximately HK $862.50 million.
The last postponement notice was issued on December 4, 2023. The relevant notice shows that the High Court of Hong Kong granted the company’s postponement application on December 4, 2023, further adjourning the hearing of the petition to January 29, 2024.
Wind data shows that as of the close of January 26, China Evergrande closed at HK $0.206/share, a decline of 4.63%; Evergrande Property closed at HK $0.4/share, a decline of 5.88%.
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