China Evergrande unit commences legal proceedings against parent

(Reuters) – Evergrande Property Services Group said on Tuesday one of its units had commenced legal proceedings against Hengda Real Estate Group Company and embattled developer China Evergrande, among others.

The unit, Jinbi Property Management Company, has commenced the proceedings for the recovery of about 2 billion yuan ($279.60 million) deposit certificate pledge guarantees.

The proceedings are related to the enforcement of Evergrande Property Services’ deposit pledge of about 13.4 billion yuan.

Jinbi Property has also commenced legal proceedings against Shenzhen Qihang Metals Materials Company, Guizhou Guangjuyuan Real Estate Development and Hengda Real Estate Group Guiyang Property.

In February, parent Evergrande had said it was in talks with Evergrande Property Services to repay the funds.

In July 2022, Evergrande’s chief executive and its finance head resigned after a preliminary probe found their involvement in diverting loans secured by Evergrande Property Services.

Evergrande was investigating how deposits worth 13.4 billion yuan belonging to Evergrande Property Services were used as collateral for pledge guarantees and seized by banks.

Evergrande Property Services has received a notice from the Guangzhou Intermediate People’s Court of Guangdong Province formally accepting the filing of the case, it said on Tuesday.

($1 = 7.1532 Chinese yuan renminbi)

(Reporting by Echha Jain in Bengaluru; Editing by Devika Syamnath)