In every city, large companies emerge and they seem to dominate the landscape and their names become well known. The general public will see the companies marketing effort and believe it is a stable company. Sometimes but not always, the company was built on relatively inexpensive money and seemingly with government support, either directly or indirectly. We are are all aware the economy moves in cycles and when a downturn moves through the national economy, the debt or inexpensive money needs to be paid back, the public finds the large company has to shrink it size.

In an article by Xie Yu and Claire Jim of Reuters, the biggest property developer in China has been China Evergrande Group has over $21 billion of offshore debt which needs to be restructured. Evergrande has over $300 billion in liabilities.To have that amount of debt, for a long time the government of China was a willing partner.

with the slowdown in China, all of Evergrande’s assets are being fought over including selling of its Hong Kong’s headquarters building for $1.7 billion.

When companies are in debt, legal firms are well represented to go through all the contracts.

Linking to dividend paying companies, one of the reasons to invest in these companies is they have made profits through a number of economic cycles. People will say, this time it is different and they are partially correct, something is a little different. However when it comes to too much debt, it is never different. Either the company has money to pay its debts or the company will shrink.

There are more questions than answers, till the next time – to raising questions.