South China City Holdings Limited was ordered to be liquidated by the High Court of Hong Kong on Monday, August 11th. This marks the largest liquidation case in China since Evergrande in terms of asset size. It is noteworthy that three years ago, Shenzhen State-owned Shenzhen Special Zone Construction and Development Group acquired a majority stake in South China City, becoming the largest single shareholder, but was unable to save the company from bankruptcy.
On August 11th, the Hong Kong Stock Exchange announced that trading of South China City Holdings Limited’s shares had been suspended from 10:55 am. Prior to the suspension, the stock price was at 0.107 Hong Kong dollars per share, a decrease of 1.83%, with a market value of 1.224 billion Hong Kong dollars.
On the same day, South China City Holdings Limited announced the resignation of its non-executive director, Feng Xinghang, effective from August 10, 2025.
Previously, on May 19th, the Hong Kong High Court postponed the liquidation petition hearing for South China City to August 11, 2025. The petition for liquidation was filed by Citigroup International, as South China City failed to repay around 306 million US dollars in debt due in April 2024. Despite months of negotiations, its restructuring plan did not receive sufficient support from creditors.
According to the financial performance disclosed by South China City, the company recorded its first significant loss since going public in 2024, with a net loss attributable to the parent company of nearly 9 billion Hong Kong dollars. Loan defaults amounted to 15.742 billion Hong Kong dollars during the period, with cash and cash equivalents at the end of the period amounting to only around 0.4 billion Hong Kong dollars. The company’s total debt stood at approximately 60.9 billion Hong Kong dollars.
Based on data from the Hong Kong Stock Exchange and the 2024 annual report, South China City founder Zheng Songxing held a 19.54% stake in the company at the end of July, while Shenzhen Special Zone Construction and Development Group Limited (referred to as “Special Zone Development Group”) held a 29.28% stake, making it the largest single shareholder of South China City.
On May 16, 2022, South China City announced that a wholly-owned subsidiary of Special Zone Development Group indirectly subscribed to 33.5 billion shares of South China City at a price of 0.57 Hong Kong dollars per share, with a subscription price of 1.9095 billion Hong Kong dollars.
Special Zone Development Group, established by the Shenzhen Municipal Committee and Municipal Government in August 2011, with a registered capital of 34.402 billion yuan, is a comprehensive investment and financing platform company under the Shenzhen State-owned Assets Supervision and Administration Commission.
On February 23, 2024, Reuters reported, citing four anonymous sources, that a group of South China City creditors planned to sue Special Zone Development based on the “Keep Well Agreement” provided to South China City. The agreement involved the parent company providing liquidity support to its subsidiaries issuing bonds, serving as a credit-enhancing tool for Chinese companies issuing bonds overseas, which investors viewed as a representation of the credibility of state-owned enterprises.
An analysis by Bloomberg suggested that the liquidation of South China City indicates that the prolonged crisis in the Chinese real estate sector continues to impact former giants in the industry. Despite government efforts to boost the sluggish real estate sector, home sales remain weak, with little possibility of short-term recovery. Even UBS Group, which had previously forecasted a recovery in the Chinese real estate sector, now anticipates that without additional stimulus measures by the Chinese government, the recovery will be delayed.
An analyst at ANZ Bank stated in a report in June that due to structural changes in demand, Chinese real estate construction is expected to decline by another 30% by 2035, which could cast a long shadow over debt restructuring efforts in the medium to short term.
Since 2024, despite repeated attempts by the Chinese authorities to stabilize the market, real estate investment in China in the first half of this year still declined by 11.2% year-on-year, with real estate sales area dropping by 3.5% and new construction starting area decreasing by 20%.
Chinese affairs expert Wang He has previously indicated in an article for The Epoch Times that the Chinese Communist Party’s policy of “stabilizing and revitalizing” the real estate sector has failed. The bubble accumulated in the development of the real estate sector by the Chinese regime over the past few decades, once burst, will require clearing in the market.
Similar to Evergrande, the liquidation of South China City also faces challenges with implementation.
In a report, Bloomberg industry research analyst Andrew Chan mentioned that there may not be many offshore assets available for liquidation as most of the company’s major subsidiaries are registered in mainland China.
Zerlina Zeng, Asia Pacific Strategic Director at Creditsights Singapore, stated that due to the company’s massive size, the liquidation process may take a long time. She added, “Given the limited additional financial support provided by Shenzhen Special Zone Development Group, the largest state-owned enterprise shareholder, we expect poor prospects for the recovery of its US dollar bonds.”
Data from investment platform FSMOne Hong Kong shows that since 2021, over 140 billion US dollars (over 70% of the total) of Chinese real estate US dollar bonds have defaulted, with most still in various stages of restructuring.
According to the Securities Times in January this year, a total of 55 listed property developers overseas have defaulted on their debts, with 28 of them receiving liquidation petitions. The majority of these petitions have been withdrawn or postponed, with only a few companies being ordered to be liquidated.
“Petition for Liquidation” refers to when creditors or other related parties submit an application to the court for mandatory liquidation of a company due to its inability to repay debts or other reasons for liquidation.
It is worth noting that many Chinese property developers have defaulted again after undergoing debt restructuring.
According to S&P Global’s “China Corporate Default Overview 2025” released in April 2024, nearly one-third (30%) of the domestic bond defaults since 2020 defaulted again after restructuring. Uncertain macroeconomic outlooks and the persistent real estate crisis that exceeded expectations have increased the number of redefault cases in 2023 and caused many restructuring cases to stagnate in 2024. The imposition of tariffs by the United States has amplified this uncertainty.
Since Chinese real estate developers faced a debt crisis in 2021, the High Court of Hong Kong has issued at least six liquidation orders. This includes, on January 29, 2024, China Evergrande was formally ordered to be liquidated by the Hong Kong High Court due to slow progress in debt restructuring and insufficient assets to cover liabilities.
In October 2022, Yangguang City’s overseas entity Sunshine City Jia Shi International was issued a liquidation order by the Hong Kong court due to the failure of debt restructuring. The company is not a listed company but a foreign entity established by Yangguang City for issuing US dollar bonds.