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Chang Ku's creditors may liquidate the company now

Creditors of Chang Ku A-Life Technology Co (長谷生活科技), formerly called Chang Ku Building Co (長谷建設), may liquidate the builder right away, Taiwan's Kaohsiung District Court ruled, throwing out a company request for time to reorganize NT$10.6 billion (US$320 million) of debt.

"Chang Ku is having difficulty staying in business" because creditors won't lend it more money, the court said in a judgment denying an extension of time to make payments sought by Cheng Ku, which owns Taiwan's third-tallest building.

The developer borrowed in the 1980s and 1990s to build homes. A slump in housing sales caused by overbuilding cut Chang Ku's regular income, leaving it unable to repay debt. Creditors may now sell off the company's assets to recover their money. "Creditors will meet to consider plans, including selling Chang Ku assets, to protect loans they made," said Grace Fang (方鳳山), spokeswoman for China Development Financial Holding Corp (中華開發金控), from which Chang Ku borrowed NT$110 million in 2001 to repay bonds.

China Development lent Chang Ku the money because it gua-ranteed the bonds and would have had to repay them had the developer defaulted in October, Fang said. The Chinese Bank (中華銀行) lent Chang Ku NT$75 million to repay bonds maturing in May 2001.

Chang Ku said in a statement that the company will appeal the court-ordered liquidation because it has assets of NT$15.1 billion, enough to meet obligations.

The nation's developers are having problems paying debt to banks with banks struggling with NT$1.68 trillion of bad loans at the end of March. Delpha Construction Co (大華建設) defaulted on NT$327 million of bonds this year. Bao Chen Construction Co (寶成建設) won a court order last month barring creditors from seizing its assets while it re-negotiates terms of NT$3.5 billion of debt.
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