China Evergrande: attempts to auction onshore affiliate Fengtao’s assets fail for a third time in 3 weeks
- No bids were received for Fengtao’s ‘other account receivables’ at the end of the 24-hour deadline on Friday morning, according to auction platform Jingdong Paimai
- Fengtao made two unsuccessful attempts in January to sell the receivables, which were listed on the auction platform for 11.5 billion yuan (US$6.2 billion)
Assets of Fengtao (Shanghai) Property Company, a property management services provider, were listed for sale on Thursday after two failed attempts last month, according to information available on Jingdong Paimai, an auction platform under Chinese e-commerce giant JD.com.
The assets were labelled as “other account receivables” totalling 11.5 billion yuan (US$6.2 billion). Despite a minimum reserve price of 7.4 billion yuan, no bids were received at the end of the 24-hour auction period at 10am on Friday, Beijing time.
Evergrande and its subsidiaries have total liabilities amounting to some 300 billion yuan, and are involved in 2,073 litigation cases for amounts of more than 30 million yuan as of the end of December 2023, according to the company.
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Fengtao made two unsuccessful attempts to sell its assets in January. The reserve price at the first auction on January 14 was 11.5 billion yuan, which was lowered to 9.2 billion yuan on January 24, according to Jingdong Paimai.
Account receivables are dues owed to a company for goods and services that have already been delivered or used, but not yet paid for by the customers. The money is listed on the company’s balance sheet as an asset, and usually collected after a short period of time, ranging from a few weeks to a year.
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In Fengtao’s case, the company has around 8.3 billion yuan in receivables from more than three years ago.
Fengtao was founded in 2009 in Shanghai and primarily engaged in developing villa projects locally. It is one of Evergrande’s more than 140 principal subsidiaries, according to the developer’s annual report in 2022.
The subsidiary’s bankruptcy and liquidation case was accepted by a Shanghai court in May last year, with Watson & Band, a local law firm, appointed as the case administrator, according to an official announcement.
Hong Kong and mainland China agreed to mutually recognise and assist in each other’s insolvency proceedings via the Mainland-Hong Kong Cooperation Mechanism in mid-2021. The scheme, however, can only be implemented in Hong Kong and the three mainland cities of Shanghai, Shenzhen and Xiamen.
