It’s Better That China Vanke Defaults Now

Companies thrive and fail, and this is the natural evolution of business cycles. What’s unnatural, however, is a zombie firm that erodes investors’ interests over time.

Shenzhen-based China Vanke Co. failed to obtain enough support for a plan to delay paying a 2 billion yuan ($283 million) bond due Monday, therefore setting the stage for a potential default. The real estate developer must repay the note within five business days, or come to some separate agreement to push back the deadline. Vanke has since sweetened the deal by offering to pay 60 million yuan interest by Dec. 22.