(June 11): The list of Chinese developers facing court-ordered liquidation in Hong Kong is getting longer, after a builder of homes in an affluent eastern coastal region was ordered to wind up.

Dexin China Holdings Co Ltd received the order on Tuesday, three months after a petition was filed by China Construction Bank (Asia), and a year and half after it defaulted. A new restructuring plan was approved last year, though the developer, which builds residential, as well as commercial buildings, wasn’t able to keep up with that either.

Hong Kong has served as a gateway for investors to access mainland issuers’ high-yield offshore bonds. But that has also made it an epicentre of the yearslong downturn in China’s property sector, which continues to dog the country’s economy. The liquidation order shows lingering distress, despite fresh attempts from the Chinese government to help the industry recover.

Dexin joins a group, including Jiayuan International Group Ltd and China Evergrande Group, that have received such orders from courts in Hong Kong in the past couple of years. This isn’t the last one, either — a number of major developers, including Country Garden Holdings Co, Ltd are set for hearings in coming months to persuade judges that they are moving forward with their own debt-overhaul plans.

The State Council, the country’s Cabinet, asked officials to keep formulating new policies that will absorb existing housing stock and stabilise markets, according to a statement posted on the government’s website late last Friday. Still, an index of Chinese developers’ shares dropped as much as 2.7% on Tuesday, falling for a second day and set for its lowest level in a month. Dexin shares dropped 6.6% on Tuesday, before trading was suspended.

Dexin, a Zhejiang-based developer, concentrated on developing homes and commercial buildings in China’s relatively wealthy Yangtze River Delta region. It had total liabilities of 64.4 billion yuan (US$8.88 billion) as of the end of 2023, according to its latest annual report.

Dexin defaulted in December 2022 with non-payment of 9.95% senior notes due in 2022, in principal amount of US$350 million. That’s a “really long time ago,” China Construction Bank’s legal representative said in court on Tuesday. The developer’s lawyer tried to argue that a small number of creditors opposed the petition and there had been attempts to negotiate.

High Court judge Linda Chan took less than 20 minutes to issue the decision. She plans to hand down a judgement within a week.

Dexin’s wind-up case number is HCCW 164/2024.

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