Distressed Chinese companies face flurry of court hearings
AT LEAST eight major distressed Chinese firms, including a China Evergrande Group unit, are set to defend themselves in court cases relating to their debt problems over the next two weeks, in one of the busiest stretches ever for such hearings.
Tianji Holding, an offshore subsidiary of Evergrande and a guarantor to some of the defaulted builder’s dollar notes, is scheduled to make its case in a Hong Kong court on Wednesday, along with HNA Group (International) and Suning Sports International. Another Evergrande subsidiary, CEG Holdings BVI, was given a liquidation order earlier this month.
Also on Wednesday, a three-day hearing will kick off in the UK to decide whether state-backed builder Sino-Ocean Group Holding’s offshore restructuring plan can proceed. The case is being closely watched as a key bondholder group has been calling on creditors to oppose the plan.
China’s property debt crisis has shown little sign of improvement in the new year.
Sunac China Holdings, one of the first major developers to restructure its offshore debt, said last week that it can’t rule out a second restructuring. Meanwhile, shares of Chinese developers have declined around 10 per cent so far this year, according to a Bloomberg index, while most of the dollar notes issued by defaulted builders are trading at deeply distressed levels of less than 10 cents.
Frustrated creditors unable to recover losses are turning to the courts for resolutions. Both Sunac and another defaulted real estate firm, Shimao Group Holdings, this month received their second winding-up petitions, after surviving previous liquidation risks.
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The latest petition poses a new challenge for Shimao, which plans to seek court approval in Hong Kong on Thursday to hold a formal creditor vote on its offshore debt overhaul.
Country Garden Holdings, once China’s largest developer by sales, also faces a hearing on a winding-up petition this month, after reaching an understanding with a bank creditor group over its debt proposal, though the company hasn’t secured support from a key bondholder group yet. BLOOMBERG
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