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China Evergrande Group reportedly sold its share in The Vertex to project partner VMS Group last month. Photo: K Y Cheng

Evergrande crisis: Hong Kong agencies to withdraw proceedings against Vertex project after new owner promises to clear dues

  • VMS Group, which now reportedly owns the residential project in Cheung Sha Wan, has told agencies that it will pay the commission owed to them
  • Agencies are pushing ahead with proceedings to recover fees for Emerald Bay, which is still owned by China Evergrande

Some of Hong Kong’s biggest property agencies were on Monday either considering or working to halt legal proceedings initiated to recover commission fees for The Vertex development after its new owner pledged that it would pay these down.

The residential project in Cheung Sha Wan has been developed by the embattled China Evergrande Group, which last month reportedly sold its share to partner VMS Group. VMS declined to comment, but told the agencies that it would pay the commission owed to them.

“VMS … verbally promised to pay us back the commission. The filing of claims for the agency’s commission from The Vertex from the developer has been terminated,” Dave Ma, Hong Kong Property Services (Agency)’s chief operations officer and director for Kowloon, said on Monday.

China Evergrande is saddled with 1.97 trillion yuan (US$308.5 billion) of liabilities, as it teeters on the brink of collapse. And its struggles have since spread to Hong Kong’s property agents.

The agencies were pushing ahead with proceedings to recover fees for Emerald Bay in Tuen Mun, which is still owned by China Evergrande.

02:35

The Evergrande theme park left derelict in China’s Jiangsu province

The Evergrande theme park left derelict in China’s Jiangsu province

“For Emerald Bay, so far there is nothing new yet. We continue [the pursuit]. Of course, we want to get back our commission. If somebody comes to us to talk [about it], we very much want to solve the matter as soon as possible,” Ma said.

Midland Realty, a sister company of Hong Kong Property Services, was also “about to withdraw” its writ against The Vertex and its legal department was working on it, according to Sammy Po, the CEO of its residential division. The writ against Emerald Bay would not be withdrawn yet, Po added.

Midland and Hong Kong Property Services last month sued Twin City Holdings, the vendor for The Vertex, and Fortune Choice Development, the vendor for Emerald Bay, to try and recover about HK$43 million (US$5.5 million) in outstanding commission and other fees.

Emerald Bay in Hong Kong’s Tuen Mun district. Photo: K Y Cheng

These vendors were also sued by Centaline Property Agency last month for about HK$106 million in commission and others fees. The agency was “considering” withdrawing its writ against The Vertex, said Shih Wing-ching, its founder. “The staff have done a lot and they have a share of the commission. If [we] do not chase after it, the staff will think the company did not fulfil [its] responsibility,” he said.

One of the concerns was that if it takes action too late, it will not be able to recover the money owed, Shih added. “We definitely want to chase it when there is commission unpaid. If the boss doesn’t pay you your salary, you will chase after it after a while,” he said. “This is legally the last resort.”

Ricacorp Properties was also chasing dozens of millions in unpaid dues, said Willy Liu, its CEO. The agency was still discussing the fees owed for The Vertex with VMS, Liu said. The company was, however, “still chasing after Emerald Bay, as Emerald Bay is still Evergrande’s. It has not been transferred to others”, he added.

01:46

World’s most indebted developer, China Evergrande Group, buys time to repay more creditors

World’s most indebted developer, China Evergrande Group, buys time to repay more creditors

“Housing projects sold in Hong Kong seldom face problems. This is a very special situation,” Liu said. “Of course, we did not expect it. If we did, we would not consider working on it. This is, of course, an emergency,” he added.

After The Vertex’s transfer to VMS, “if it can solve the financial [issue], it is good for the market, for us and buyers”, Liu said.

This article appeared in the South China Morning Post print edition as: Agencies to withdraw proceedings over Vertex
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