By Clare Jim and Rishav Chatterjee
(Reuters) -China Evergrande The electric vehicle group said on Monday that a Chinese court had ruled that two of its subsidiaries must declare bankruptcy and be reorganized, sending the EV group’s shares plunging 7.9%, the lowest since May 16.
The news about the subsidiaries of the embattled real estate developer’s New Energy Vehicle operation came after creditors filed for proceedings last month. Their documents gave no reasons.
Such a bankruptcy and reorganization could impact ongoing talks between the administrators of parent company China Evergrande (HK:) Group, the world’s most indebted property developer, and a potential buyer interested in taking a stake in the EV company, market observers told Reuters.
A separate filing with the National Enterprise Bankruptcy Information Disclosure Platform showed that a creditors’ meeting on the reorganization will take place at the Guangzhou Intermediate People’s Court on October 22.
The electric vehicle maker said the court had ordered the units – Evergrande New Energy Vehicle (Guangdong) and Evergrande Smart Automotive (Guangdong) – to enter the proceedings after a hearing on August 2.
It was not discussed further.
It said on July 28 that creditors of the two units had sought court approval for the bankruptcy and reorganizations, warning that the move would have “a material impact” on production and operations. Shares in the group fell 7% on July 29.
The Guangzhou Intermediate People’s Court said in its own application that it had appointed law firm Zhong Lun (Shenzhen) as administrator for the reorganization of Evergrande Smart Automotive (Guangdong), and that the creditors who filed the application were Guangdong Overseas Construction Consulting Co and Guangzhou Shenlong Road were. Transport Co.
In May, the liquidators of the parent company – which owned 58.5% of the EV unit – said they were in talks with an external buyer to sell a 29% stake in the EV group, with a option to sell the remainder of the holding within one year. a certain period.
A final agreement has yet to be signed. Evergrande’s parent company said in late July that under initial terms, the buyer would also provide a line of credit to the EV company to finance its operations.
