Chinese creditors pivot to Hong Kong courts to recoup property developer debts

[HONG KONG] Chinese creditors who have struggled to recover funds from distressed property developers on the mainland are increasingly turning to Hong Kong courts in their quest for repayment.

The latest in a string of recent cases involves the chairman of Sunac China Holdings, who is being sued in Hong Kong by one of the company’s suppliers. Beijing Oriental Yuhong Waterproof Technology is asking the court to enforce an onshore ruling against Sun Hongbin from last year, in which he was ordered to pay out more than 418.5 million yuan (S$77.9 million), according to judicial documents seen by Bloomberg.

If the court rules in favour of the waterproofing company, it can allow it to access Sun’s offshore assets, making it a potentially useful route to recoup funds. Hong Kong courts are able to take action on mainland cases under reciprocal recognition arrangements rolled out in recent years to bolster cross‑border enforcement of commercial and insolvency disputes.

Lawsuits such as the one against Sun may offer a road map for other onshore creditors ensnared in debt disputes involving Chinese developers.

“Onshore creditors are now pursuing recoveries wherever assets can be found – both onshore and offshore – and are actively deploying legal tools to build leverage and force debtors back to the negotiating table,” said Glen Ho, Asia-Pacific contingency planning and insolvency leader at Deloitte.

Sun Hongbin could not be reached for comment. Sunac and Beijing Oriental Yuhong did not respond to requests for comment.

Another case involves Agile Group Holdings. Late last year, a unit of casino operator Melco International Development filed a liquidation petition against the defaulted Chinese builder in an effort to recoup the more US$18 million it won in a Chinese arbitration tribunal ruling earlier that year.

Similarly, a unit of Agricultural Bank of China took its case against defaulted Chinese builder Shimao Group Holdings to Hong Kong last August, seeking to recover about one billion yuan related to a 2022 mainland court ruling.

The series of cross-border cases also comes as many Chinese developers have finished restructurings after being battered by the country’s yearslong real estate crisis. Sunac, for example, completed its second offshore restructuring in December 2025, while Shimao finished one of its own that year.

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While completing a restructuring does not necessarily mean that a company’s financial challenges are resolved, it generally allows it to focus on improving its operations rather than worrying about creditors seeking repayments. Having an onshore creditor suddenly target offshore assets at such a time would be an unwelcome development, likely opening a window for talks to defuse the situation.

After initially focusing on resolving offshore liabilities, creditors’ attention is now shifting towards the restructuring and recovery of onshore debt, said Ho. BLOOMBERG