High Court winds up China South City Holdings Ltd

On 11 August 2025, the Honourable Madam Justice Linda Chan made a winding up order against China South City Holdings Ltd (the “Company”). According to Reuters, this is the first state-backed property developer to be wound up in Hong Kong since the Chinese property sector tipped into debt crisis in 2021.

The Company and its group of subsidiaries (the “Group”) is a real estate developer and operates a large scale integrated logistics and trade centre in 8 major cities in the Mainland under the brand name “華南城”.

The Court had preciously adjourned the petition on two occasions, but refused to allow the third request for adjournment. The Court held that an immediate winding up order was warranted, as:-

1. The Company was clearly insolvent. The improvement in the Group’s income pales into insignificance compared to the net loss recorded in the Group’s accounts.
2. There was no realistic or feasible proposal to compromise the Company’s offshore debts, nor was there real progress in its proposed restructuring in the prior adjournment period. In particular, the Company was clearly unable to come up with a proposal that would be accepted by the Ad Hoc Group of bondholders (the “AHG”) (which hold 37.6% of the Company’s total offshore debts). Without the AHG’s support, no scheme of arrangement could be proceeded with.
3. Whilst other creditors of the Company had filed notices of intention to oppose the petition, the total amount of debt held by these creditors only represent 15.8% of the Company’s total offshore debts.
4. As for those who have not filed any notice of intention to appear and oppose the petition or explained what intended restructuring they seek to support, there is no proper basis for the Court to give weight to their views.
5. Further, the Court found that the opposing creditors had not put forward any valid ground as to why they considered it would be in the interest of the creditors as a whole for the petition to be further adjourned when the Company is grossly insolvent and there is no viable proposal to restructure its offshore debts.

Read the judgment here at

https://legalref.judiciary.hk/lrs/common/ju/loadPdf.jsp?url=https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2025/HCCW000054_2025.docx&mobile=N

Ms. Rachel Lam SC and Ms. Tiffany Chan was instructed by Johnson Stokes & Master for the Petitioner.

Mr. Terrence Tai was instructed by Howse Williams for an opposing creditor.

Mr. Lai Chun Ho was instructed by Charles Chu & Kenneth Sit for opposing creditors.