Country Garden: China property giant hit with winding-up petition

Country Garden, China's biggest private property developer, is facing a winding up petition, filed in Hong Kong by a creditor.

A firm called Ever Credit Limited filed suit for non-payment of a loan of HK$1.6bn ($204.5m; £161.2m).

Country Garden, which defaulted on its foreign debt in October, says it will "vigorously oppose" the petition.

Last month, rival real estate giant China Evergrande was ordered to be liquidated by a Hong Kong court.

The court has set May 17 as the first hearing date for the petition, Country Garden said in a statement to the Hong Kong Stock Exchange.

Ever Credit is a unit of Kingboard Holdings, a laminate manufacturer and property investor.

Country Garden shares fell more than 10% in early Hong Kong trading after the announcement.

Country Garden did not immediately respond to the BBC's request for comment.

"The filing of a winding up petition against Country Garden is not a surprise to us," Jason Sze of personal finance firm iFAST Financial told the BBC.

It comes a month after Evergrande, the world's most indebted property developer, was ordered into liquidation by a Hong Kong court.

The firm has been the poster child of China's real estate crisis, with more than $300bn (£236bn) of debt.

Liquidators have been appointed to look at the overall financial position of Evergrande and identify possible restructuring strategies.

This may involve seizing and selling assets, so that the proceeds can be used to repay outstanding debts.

However, the Chinese government may be reluctant to halt work on property development in China, where many ordinary prospective homeowners are waiting for apartments they have already paid for.

Mr Saez does not expect Country Garden to face a forced liquidation order like Evergrande.

"We believe the company will initiate an offshore debt restructuring plan as soon as possible to prevent the winding up petition and settle the defaulted loans," he said.

The problems in China's property market are having a major impact as the region accounts for a third of the economy.

The industry has been facing a major financial crunch since 2021, when authorities introduced measures to curb the amount of borrowing by big real estate companies.

Since then over the years many large property developers have defaulted on their loans.