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

[HONG KONG] Chinese creditors that 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 Sun Hongbin, 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 from last year, in which he was ordered to pay out more than 418.5 million yuan (S$77.9 million), judicial documents seen by Bloomberg showed.

If the court rules in favour of the waterproofing company, the latter could be granted 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.

Glen Ho, Asia-Pacific contingency planning and insolvency leader at Deloitte, said 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”.

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

Another case involves Agile Group. 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 that it had won in a Chinese arbitration tribunal ruling earlier that year.

SEE ALSO

China’s Shenzhen relaxes home buying rules to boost demand

China property tipping point will drive up stocks, JPMorgan says

China Evergrande’s billionaire boss falls from circles of power to fraud plea

China Vanke seeks to delay another bond payment to avoid default

Underwater mortgages force China’s banks to get more creative

China’s property slump far from over despite embattled developer Country Garden’s return to profit

New World’s top shareholder seeks to refinance HK$7.3 billion loan

More

Similarly, a unit of Agricultural Bank of China took its case against defaulted Chinese builder Shimao Group to Hong Kong in August 2025, 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.

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.

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