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Negotiations to prevent the breakup of the company didn’t lead to a deal over the weekend, people familiar with the matter said

Property developer China Evergrande Group has been ordered to liquidate by a Hong Kong court, bringing an end to the yearslong saga of a company whose default rippled through the world’s second-largest economy.

The liquidation order came despite an 11th-hour push by the company’s creditors to reach a deal over the weekend, according to people familiar with the matter. It comes more than two years after the company defaulted on its dollar bonds, becoming one of the first dominoes to fall in China’s beleaguered real-estate sector.

“The time is for the court to say enough is enough,” said Judge Linda Chan in Hong Kong’s high court.

The judge said that Evergrande was given another adjournment in December to come up with a new restructuring deal, seek comments from the creditors, and get a legal opinion on the proposal. “None of that has happened,” Chan said.

Evergrande’s lawyer argued for another adjournment, saying that an immediate liquidation order would affect the value of the company’s offshore assets and subsidiaries, thereby damaging the potential recovery rate for creditors. But a lawyer for the main creditors group argued that Evergrande hadn’t negotiated with them in good faith, and the judge agreed.

Evergrande’s liquidation is likely to send another shock wave through the Chinese real-estate industry that already has seen dozens of developers collapse over the past two years as banks pulled back funding and property values underwent a sharp correction.

The company was once China’s biggest property developer by sales. But, saddled with some $300 billion in liabilities, Evergrande stopped paying its debts over two years ago and has been negotiating a restructuring with its creditors ever since.

The court order will give creditors control over Evergrande’s parent company and allow them to liquidate all of its businesses.

The court will now appoint a liquidator for Evergrande’s parent company. The liquidator will be empowered to take over all of Evergrande’s subsidiaries around the world, including in China, and sell the company’s assets to repay its debt.

Much of Evergrande’s assets have already been sold, seized by creditors or frozen by Chinese courts. The developer’s dollar bonds were bid below 2 cents on the dollar on Friday.

Shares of China Evergrande and its listed subsidiaries halted trading midmorning in Hong Kong. Evergrande’s shares fell 21% before the trading halt, after The Wall Street Journal published a story that negotiations had broken down.

One unresolved issue is the reach of the Hong Kong liquidator’s legal power in mainland China. Courts in China have recently started to recognize the legal authority of liquidators from jurisdictions like Hong Kong, where Evergrande’s parent company is listed. In 2022, a Shenzhen court recognized a Hong Kong court-appointed liquidator’s authority in the reorganization of Samson Paper.

In a separate afternoon hearing, the same judge appointed Alvarez & Marsal’s managing directors Tiffany Wong and Eddie Middleton as Evergrande’s joint liquidators. Middleton led the liquidation of Lehman Brothers’ assets in Asia. Wong recently worked on Luckin Coffee’s restructuring.

In a statement, Wong said the winding-up order only applied to the parent company and won’t have a direct impact on Evergrande’s subsidiaries operating in mainland China. “Our priority is to see as much of the business as possible retained, restructured, or remain operational,” Wong said.

Evergrande’s winding-up hearing was pushed back multiple times after Top Shine Global, one of Evergrande’s offshore creditors, filed a petition to liquidate the company in June 2022. Chinese regulators blocked an earlier restructuring deal after they barred Evergrande from issuing new securities, which was a key feature of the plan.

Evergrande’s default was a watershed moment for the Chinese real-estate industry and fueled a liquidity crisis in the sector. Since then, more than 50 developers have defaulted on their debts, and thousands of people in the sector have lost their jobs.

Sunac China, another large developer that defaulted on its debt, wrapped up its restructuring late last year, providing a road map for peers. Sunac received approval from investors holding 98.3% of its foreign bonds

The crisis has dealt a blow to China’s economy. The real-estate sector and related industries used to be a major driver for the country’s economic growth and contributed to around a quarter of its gross domestic product. The industry is now dragging down the economy and China’s real estate slump looks set to drag on for years.

New data on the sector’s 2023 performance showed a desperate picture, and economists say the downturn—now in its fourth year—is about to get worse.

Sales of newly built homes in China fell 6% last year, returning to a level not seen since 2016, according to China’s statistics bureau. Prices are also falling, even in the country’s wealthiest cities. Chinese local governments have lost a major source of revenue as land sales plummeted.

After a six-year hiatus, Neiman Marcus last year restarted its award program to recognize achievements in the field of fashion and strengthen partnerships with luxury brands and designers.

Daniel Roseberry, creative director of Schiaparelli, will receive the 2024 Neiman Marcus Award for Creative Impact in the Field of Fashion, recognizing his “unrivaled creativity and craftsmanship and bridging art with fashion.”

The Texas-born Roseberry is credited with successfully embodying Schiaparelli’s surrealist and whimsical house codes through a modern lens, and carrying on the legacy of Elsa Schiaparelli. The French fashion brand is owned by Diego Della Valle, the Italian entrepreneur who also is chairman and chief executive officer of Tod’s Group.

“As Schiaparelli’s largest partner in the world, NMG is proud to have built a relationship rooted in a shared desire to champion the maison’s extraordinary artistry for the American luxury customer,” Geoffroy van Raemdonck, CEO of the Neiman Marcus Group, said in a statement. Van Raemdonck cited Roseberry’s “distinct vision ushering in a new chapter for the storied brand.”

“In work and in life, creative impact is my number-one goal, my core value, my North Star,” Roseberry said in his statement, adding that receiving the award fulfills his dream to be part of an institution that he grew up with, as a Texan. Neiman’s is based in Dallas.

“The fact that Elsa Schiaparelli was also honored with an award in 1940 only adds a deeper dimension to my gratitude,” Roseberry said.

The late, legendary Neiman Marcus impresario Stanley Marcus presented Schiaparelli with the Neiman Marcus Award for Distinguished Service in the Field of Fashion, which he originated with Carrie Marcus Neiman 86 years ago.

The Schiaparelli shop inside the downtown Dallas Neiman Marcus store. STEPHEN KARLISCH

As WWD reported earlier this month, Maria Grazia Chiuri, creative director of women’s haute couture, ready-to-wear and accessories for Dior, will receive Neiman’s 2024 Distinguished Service Award, which along with Neiman’s Creative Impact Award, are part of the luxury retailer’s annual award program that also presents Neiman’s Innovation Award. The recipient of Neiman’s Innovation Award is yet to be revealed. The three 2024 award recipients will be honored during Paris Fashion Week on March 3 at the Ritz Paris.

The award program helps strengthen Neiman’s partnerships with luxury designers and brands, potentially generating greater business with them, and gaining an edge on competitors such as Saks Fifth Avenue, Bloomingdale’s and Nordstrom, which is particularly important in the current climate of softening luxury sales. It can increase a designer’s distribution across NMG’s three selling channels — stores, e-commerce and remote selling — and furthers NMG’s strategy of “retail-tainment,” which centers on developing innovative special events and activations in stores. Exclusives can be part of the program.

Schiaparelli maintains a limited distribution but has an exclusive arrangement in the U.S. with the Neiman Marcus Group, which operates shops for the French brand at its downtown Dallas store, inside Neiman’s Beverly Hills location, and inside Bergdorf Goodman in Manhattan, which is owned by NMG.

Delphine Bellini, Schiaparelli’s CEO, said in a statement, “For the last four and a half years, Daniel has been gradually revealing the poetry of his imagination and the power of his concepts. He’s a perfectionist and a hard worker. I don’t see him as a fashion designer, but as an artist with a multifaceted talent. A creator of genius, he brings the consistency and coherence of a vision that blends pop culture, art and avant-gardism.”

“Daniel is a creative force whose acute understanding of fine art, fashion history, pop culture, and couture execution has captivated the industry,” said Lana Todorovich, NMG’s chief merchandising officer.

As a relationship business, the awards platform reinforces Neiman Marcus’ fashion authority and embodies its innovative approach to retail, connecting brand partners to luxury customers in entirely new ways. The retailer will collaborate with Roseberry to activate an exclusive expression of the Schiaparelli brand later this year.

The Neiman Marcus Awards have a long history of honoring the tradition of French couture with past recipients including Yves Saint Laurent, Coco Chanel and Pierre Balmain. The retailer initially launched the Neiman Marcus Distinguished Service Award in the Field of Fashion. The other Neiman’s awards were subsequently added.

Italian government urged to emulate France and Germany to decarbonise and help save country’s largest steel plant

Italy should emulate France and German by funding the green transition of ArcelorMittal’s ailing plant to prevent the closure of the country’s largest steelworks and a domino effect on the economy, the chief of the Italian steel industry body has said.

The Franco-Indian steel group, which owns a 62 per cent stake in the plant, formerly known as Ilva, has been resisting a government plan to place the steelworks into special administration, a move that would wipe out its equity. Rome said earlier this month that a special administrator would be appointed by the beginning of February.

Last year the European Commission approved €2bn in German subsidies to Thyssen Krupp for a so-called direct reduction iron plant, a new and greener way to produce steel, in Duisburg. It also greenlighted a French package of up to €850mn to help fund a plan to decarbonise ArcelorMittal’s plant in Dunkirk.

“Italy must spend money to facilitate the plant’s decarbonisation just like Germany has done for Thyssen Krupp and France for ArcelorMittal’s domestic plant,” said Antonio Gozzi, chair of Federacciai, the steel industry’s association.

“There’s steel overcapacity across the world, so if Acciaierie d’Italia (AdI) shuts down it doesn’t make a difference in the grand scheme of things,” Gozzi, who also chairs his family-owned steel group Duferco, added. “But it would be a disaster for Italy’s manufacturing industry to have to rely on foreign steel supplies.”

The investments needed to support the heavy CO₂ emitter’s green transition have been a sticking point between the Franco-Indian group, state investment agency Invitalia — which owns a stake in the steelworks — and Giorgia Meloni’s government.

ArcelorMittal bought the plant located in the southern city of Taranto in 2018 for €1.8bn from the state, which had placed it into special administration. The group has said it is not planning to invest further funds in the business over disagreements with Invitalia.

According to Gozzi multiple legal and political issues, including around the plant’s decarbonisation, have led to ArcelorMittal’s “complete disengagement”.

Under the European Green Deal targets, plants like the one owned by ArcelorMittal must become carbon neutral by the end of the decade.

Gozzi said 80 per cent of Italian steelworks had already shifted to electric furnaces.

But the ArcelorMittal plant has been plagued by scandals, environmental problems and legal cases that led to a drop in production, lay-offs and a supply chain crisis.

In 2023 the plant, which has a yearly capacity of 8mn tonnes, produced less than 3mn tonnes of steel. Its main furnace was forced to shut down in 2019 after a court ruled it did not meet minimum workplace safety requirements.

Gozzi said Italy cannot afford to give up on the ailing plant, which employs about 10,000 people. He mentioned uncertainty over delivery times and prices as risks that Italy’s manufacturing industry would face if it became reliant on foreign supplies.

The ArcelorMittal plant is the main steel supplier to Italy’s automotive industry, which includes the likes of Stellantis, Maserati and Ferrari.

“If the government were to fund two new direct reduced iron systems it could go back to producing 5mn tonnes per year,” Gozzi estimated.

The government has not commented on plans to fund the plant’s decarbonisation. Last week, industry minister Adolfo Urso said the government would support the plant’s suppliers who, it said, were owed about €180mn in unpaid invoices by the steelworks, a figure the company’s management contests.

Urso was also in touch with the country’s largest steel companies, including Arvedi and Marcegaglia, to discuss a potential takeover of the plant once it was in the hands of a special administrator, according to people close to the talks.

But last week ArcelorMittal sent the Italian government a letter demanding an amicable solution to the dispute, saying they were willing to remain as a minority investor.

“Of course it makes sense for them to find a solution, nobody wants this to end up in court,” said Gozzi.

EDF’s UK woes pile pressure on nuclear push at home and abroad

Fight with London over Hinkley Point comes as the state company has been tasked to build six to 14 reactors in France alone

When in 2016 France’s EDF signed up to build Britain’s first new nuclear power plant in two decades, defenders of the costly Hinkley Point C project included Emmanuel Macron, then economy minister. 

“If we believe in nuclear power, we have to do Hinkley Point,” France’s now president told a parliamentary enquiry, rejecting some lawmakers’ concerns that state-backed EDF, which was already struggling to deliver a new French prototype plant in Normandy, may not have the financial bandwidth to take on the British site, originally estimated to cost £18bn. 

Eight years on, with cost overruns surging at Hinkley due to repeated delays and EDF on the hook for at least another £5bn on top of previous budget revisions, Macron’s government is on a mission to ensure the French nuclear operator can indeed withstand the fallout — and keep on top of ballooning investments and orders at home. 

French ministers are trying to get the British state to stump up some support for the soaring Hinkley bill, which could reach a total of £46bn at today’s prices for the two reactors, people close to the talks have said. 

That would be roughly double the original budget in 2015 prices, compared with an EDF project in Finland that ended up costing more than twice what it was supposed to and a plan for one reactor at Flamanville in France that is running four times over budget, at €13.2bn.

But the Hinkley setbacks have also revived a core strategic question that is becoming more pressing than ever for EDF, a former French electricity monopoly that operates Europe’s biggest fleet of 56 domestic reactors: whether it is equipped to handle multiple projects at once, internationally and at home, and financially as well as from an industrial perspective. 

Already an issue in 2016, when French labour unions at the group opposed the Hinkley plans on the basis that the financial set-up was risky, this tension now has a different edge to it.

Climate concerns are fuelling a revival of the low-carbon technology globally. In France alone Macron has committed EDF to at least another six new reactors, which could even rise to 14 or more in the coming decades — a huge change after a tiny trickle of orders since the Fukushima disaster of 2011.

EDF, meanwhile, is only just emerging from one of the worst periods of financial turmoil of its 78-year history: outages at French plants led it to a near €18bn loss in 2022, and the group, with debts already reaching €65bn, was fully renationalised last year.

Its chief executive Luc Rémont, appointed just over a year ago, has not missed a chance to remind politicians EDF’s day-to-day investment needs are now €25bn a year to cover work on existing plants and to prepare a massive recruitment drive for the plants to come — a sum that does not even cover the construction costs that will be needed.

This burden has made the Hinkley problems Rémont has inherited even more unwelcome, at a time when he has tried to make headway for the group with a deal with the French state for future electricity prices a decent margin above its production costs. This would allow EDF to finance some investments itself without even more debt or state help. 

Hinkley Point C will now not see the light of day until at least 2029, when teams of engineers and other staff that France is also counting on will be stretched for longer in Britain.

“As long as you have a project running, you are doubly punished. You’re paying for a project to be completed and not generating new revenues,” said Denis Florin, an energy specialist at Lavoisier Conseil.

For now, however, EDF is doubling down on the argument that doing more plants at once will ultimately be beneficial.

The thinking is that it can get to a cookie-cutter level of construction for the complex reactors, with teething problems ironed out and design issues resolved. This would help not only other projects it is aiming for in Britain like the £20bn Sizewell C reactor but also its ambitions from India to the Czech Republic.

“We need to be present at scale,” Rémont told reporters in November. “Like in all industries you’re looking at a massification effect to become more competitive, and that’s something that has not been possible in the past 20 years in the nuclear industry because there were too few projects.”

In a punchy promise he said EDF would be aiming to build one to 1.5 reactors a year by the mid to late 2030s in France once its programme really gets going. It is not a direct stakeholder in all projects: in India, for example — as opposed to the British projects — the company is tendering to be a constructor but would not be implicated financially, reducing some of the risks.

Hinkley was delayed last week because of the estimated time it will take to install new wiring and piping systems. But it was also held back as safety requirements from British regulators evolved, executives said. They cited 7,000 changes that had to be made to designs, requiring 35 per cent more steel and 25 per cent more concrete. 

Even some of the plant’s original detractors now believe Hinkley needs to go ahead given how much labour and funding has already been poured into it, not least because of the setbacks, it will be an international showcase for EDF.

“Even if we were against it, we’re in it now and we have to advance,” said Virginie Neumayer of the French CGT union with a large presence at EDF. She added, however, that there was a question over whether the group should continue to expand internationally, “if we end up in so many difficulties”.

The laborious new nuclear constructions are not helping sell the industry to detractors who highlight issues over treating atomic waste, but also the high costs and huge delays. EDF’s Flamanville 3 reactor in France — finally due to come online later this year — is a decade behind schedule. 

There are some encouraging signals all the same. The Olkiluoto reactor in Finland, designed by Areva, a French reactor maker EDF had to bail out and absorb in 2015, was 13 years late but came online in 2022 — a big relief in terms of energy security after Russia reduced gas supplies to Europe after invading Ukraine.

“The construction phase was painful and it created political tensions too, but now it’s working and the results are there,” said Cécile Maisonneuve, a senior fellow at the Institut Montaigne think-tank. “We’re in the difficult years of the learning curve.”

One lesson will also be on financing. Under the Hinkley deal struck in 2016, EDF’s revenues benefit from price guarantees once production is up and running, offering returns of more than 9 per cent.

But the construction costs are for EDF and shareholders to stomach alone, a problem now as the French group’s Chinese partner CGN has stopped paying for over-costs.

“It’s likely there will have to be tough bargaining between France, EDF and the British state,” Florin said.

Indebted property group fails to agree restructuring plan with creditors

A Hong Kong court has ordered China Evergrande to be wound up, opening a new and unpredictable phase in the collapse of the world’s most indebted property developer.

The liquidation order comes just over two years after the company’s official default, which triggered a cash crunch for Chinese developers that is still hobbling the world’s second-largest economy.

High Court Judge Linda Chan issued the order on Monday after the developer failed to come up with a restructuring plan to satisfy international creditors despite lengthy negotiations.

“It would be a situation where the court says enough is enough,” Chan said. “I consider that it is appropriate for the court to make a winding-up order against the company, and I so order.”

The decision is set to test the reach of Hong Kong courts in the Chinese mainland, where foreign claims are widely seen to hold little sway and the property slowdown has become one of Beijing’s biggest political challenges.

While Evergrande is listed in Hong Kong, almost all of its assets and the vast majority of its more than $300bn in liabilities are in China. Authorities have so far prioritised the completion of unfinished projects by developers.

The judge’s order will allow a liquidator to attempt to take control of Evergrande’s assets outside China, including Hong Kong-listed subsidiaries that were part of the failed restructuring negotiations.

It could also trigger further lawsuits stemming from the billions of dollars of losses related to the company’s collapse.

Trading in the Hong Kong-listed shares of Evergrande and two of its subsidiaries was halted after the ruling.

Speaking after the hearing Fergus Saurin, a partner at law firm Kirkland and Ellis, which represents a key group of Evergrande creditors, said: “We are not surprised by the outcome. It’s a product of the company failing to engage with [us].

“There has been a history of last-minute engagement which has gone nowhere. And in the circumstances, the company only has itself to blame for being wound up.”

In theory, the ruling could pave the way for liquidators to attempt to seize control of some Evergrande assets in mainland China, since Hong Kong has a mutual recognition agreement on insolvency and restructuring that applies in some parts of China.

However, it is not clear how far mainland courts will accept the Hong Kong winding-up order. Asked about the issue, Saurin declined to comment.

Shortly after the court order, Chinese media reported that Evergrande chief Shawn Siu responded that the company would “do everything possible” to ensure the continued delivery of property development projects in China, adding that the operation of its onshore and offshore subsidiaries would “remain unaffected” as the court order was based in Hong Kong.

Siu was also cited saying the court decision was “regrettable”.

Evergrande did not immediately respond to a request for comment from the Financial Times.

Brock Silvers, chief investment officer of Hong Kong private equity group Kaiyuan Capital, said in a written comment: “Offshore creditors may lack good alternatives, but a wind-up order from the Hong Kong court today would be the beginning of a multiyear, very costly process ultimately unlikely to yield significant recoveries.”

Before the trading halt and following the order, shares in Evergrande fell more than 20 per cent to HK$0.16, while outstanding dollar bonds issued by the developer traded at deeply distressed levels, with one bond maturing in 2025 trading at less than two cents on the dollar.

A previous deal between Evergrande and international investors fell apart in September after Chinese authorities failed to grant some regulatory approvals. Hui Ka Yan, Evergrande’s chair, was placed under “mandatory measures” days later on suspicion of “illegal crimes”, authorities said at the time.

The winding-up lawsuit was filed in 2022 by offshore creditor Top Shine Global, which said Evergrande had failed to honour HK$863mn (US$110mn) worth of claims.

The decision could have implications for other developers still locked in protracted restructuring negotiations with offshore creditors. Jiayuan, another Chinese developer, received a winding-up order from the same judge last year.