Evergrande is expected to have a record number of legal challenges in Chinese courts this year as contractors have put pressure on the developer to reduce debt of more than $100bn. According to a data provider reported by FT, Evergrande is involved in 427 legal cases this year as compared to 436 for the full year of 2020. The number of legal cases involving Evergrande have far surpassed other major developers with FT noting that investment grade rated peer Country Garden was involved in 39 cases in 2021. Most of Evergrande’s lawsuits involve contractor disputes as the developer relies on the commercial invoices issued to the partner company before the final cash payment.
Among the legal challenges, China’s Huaibei Mining Group was suing Evergrande in Anhui province, alleging that the developer owed one of its subsidiaries CNY 401mn ($62mn) and asked the court to terminate several construction contracts. Also, advertising firm Leo Group said this month that it is petitioning the Shenzhen court to freeze Evergrande’s assets claiming that the developer owed one of its subsidiaries advertising fees of CNY 132mn ($20mn). Furthermore, in July, a Jiangsu province court froze CNY 132mn ($20mn) in deposits at the request of China Guangfa Bank, which involved disputes over the prepayment terms of loans.
Evergrande’s 9.5% 2022s are down 1.44 points to 46.9 cents on the dollar.
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