The Fitch rating agency on Dec. 9 issued a statement finding the Chinese real estate company to be in “restricted default” with its creditors, for failure to pay on its bond, with Moody’s and S&P expected to follow suit shortly. This step has been long-expected, but the formal statement raises the question if the company’s creditors will now file for formal bankruptcy liquidation, and what the consequences of that will be.
According to press accounts, Evergrande is a large company, with about 200,000 employees and $110 billion in sales last year. Asia Markets reported that, “should Evergrande be liquidated in the event of a formal default, some experts have predicted bondholders would be paid only around 5% of their claims. So the question is, do large creditors even want insolvency just yet if they too can continue to kick the can down the road?”
