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China Evergrande's EV arm systems to go into insolvency proceedings, court guidelines

China Evergrande's electrical car group said on Monday a Chinese court had ruled that 2 of its subsidiaries ought to enter bankruptcy and be reorganised, sending out the EV group's shares plunging 7.9%, the lowest because May 16.

The news about the subsidiaries of the embattled genuine estate developer's New Energy Lorry operation came after lenders filed for the procedures last month. Their filings did not spell out factors.

Any such insolvency and reorganization could affect ongoing talks in between liquidators of parent China Evergrande Group, the world's most indebted property developer, and a potential purchaser thinking about taking a stake in the EV business, market watchers informed Reuters.

A separate filing at the National Enterprise Personal Bankruptcy Information Disclosure Platform revealed a financial institution meeting about the reorganization will be hung on Oct. 22 at the Guangzhou Intermediate Individuals's Court.

The electrical lorry maker said the court had bought the systems - Evergrande New Energy Car (Guangdong) and Evergrande Smart Automotive (Guangdong) - to enter into the procedures after a hearing on Aug. 2.

It did not enter into more information.

It said on July 28 that lenders of the 2 units had sought court approval for the bankruptcy and reorganisations, and cautioned that the relocation would have a material effect on its production and operating activities. Shares in the group sank 7%. on July 29.

The Guangzhou Intermediate People's Court said in its. own filing it had designated law office Zhong Lun (Shenzhen) as the. administrator for the Evergrande Smart Automotive (Guangdong). reorganization, and the financial institutions who filed the application were. Guangdong Overseas Building And Construction Consulting Co and Guangzhou. Shenlong Roadway Transportation Co.

. In May, liquidators of the parent company - which held 58.5%. in the EV unit - said they were speaking to a third-party purchaser. to sell a 29% stake in the EV group, with an option to offer the. remainder of the holding within a specific time period.

A definite agreement has yet to be signed. The Evergrande. moms and dad business said in late July that under preliminary terms, the. purchaser would likewise supply a credit limit to the EV business to. finance its operation.

(source: Reuters)