HONG KONG – China Evergrande Group won breathing room to strike a restructuring agreement with creditors after a Hong Kong court again pushed back a decision on whether the world’s most-indebted property developer should be wound up.

The proceedings have been adjourned to Jan 29, Judge Linda Chan said in the city’s High Court.

Evergrande’s offshore creditors had demanded controlling stakes in the equity of the builder as well as its two Hong Kong subsidiaries as part of the debt discussions, Bloomberg News reported last week.

Evergrande had proposed offering 17.8 per cent of the parent and 30 per cent of each of the subsidiaries – Evergrande Property Services Group and China Evergrande New Energy Vehicle Group.

The home builder now has eight weeks to agree a deal with offshore bond holders for what would be one of the nation’s biggest-ever restructurings.

The adjournment is a surprise after Judge Chan said at the last hearing in late October, when granting the latest in a series of delays since they began in 2022, that “this is really the last adjournment”.

The delay comes as China introduces new measures to put a floor under a property market that has been roiled since the introduction of measures three years ago aimed at cutting the industry’s reliance on debt.

The International Money Fund warned earlier in 2023 that the trouble could spill over to the financial industry and local government if confidence is not restored.

Evergrande is trying to salvage its multi-billion-dollar debt overhaul since a slew of setbacks derailed the process in recent months.

The so-called ad-hoc group of bond holders has said it holds more than US$6 billion (S$8 billion) of the builder’s roughly US$19 billion of offshore notes.

Evergrande, which has liabilities of about US$327 billion, has become the poster child of China’s real estate debt crisis since it defaulted in December 2021.

China has been releasing new measures to shore up the struggling sector, including drafting a list of builders that would be eligible for funding support. But there is little indication that Evergrande has benefited at all.

The developer scrapped creditor meetings at the last minute in late September and said it would reassess its original restructuring proposal.

In the same month, its founder and chairman Hui Ka Yan was suspected of committing crimes and placed under police control.

In the most recent court hearing in October, Evergrande’s lawyer contended that the company was considering a new plan – one that would offer creditors new shares in its units, after the firm failed to obtain permission from the Chinese authorities to issue bonds.

That argument won what Judge Linda Chan called “a final adjournment”.

Any order to wind up Evergrande will further complicate the picture for creditors and home buyers.

One big question is whether a liquidation decision by a Hong Kong judge would be acknowledged and carried out in China.

Another is what happens to the progress of building pre-sold homes – estimated at 604 billion yuan (S$114 billion) – that the company has yet to deliver. BLOOMBERG