HK court approves withdrawal of wind-up case against Sunac China

A HONG KONG court has granted an order for the withdrawal of a winding-up lawsuit against Sunac China Holdings, removing a hurdle to the developer’s US$9 billion debt restructuring. 

The petition has been withdrawn and winding up proceedings against the company “have been discontinued,” Sunac said in an exchange filing on Wednesday (Jun 14). The case was filed in September last year by a bondholder who the builder previously said is allegedly owed US$22 million in principal plus interest on senior notes.

The petition withdrawal is a relief for Sunac after three smaller peers were ordered by Hong Kong courts within the past year to liquidate after losing winding-up cases in the city. Those orders highlighted the unprecedented stress among Chinese developers from a liquidity crunch that fuelled record defaults on offshore bonds. Sunac missed its first payment in May 2022.

Sunac’s restructuring proposal has secured support from investors holding about 87 per cent of the developer’s offshore debt. If the plan receives court approval, it will become binding on all creditors. The restructuring terms feature convertible bonds linked to its shares as well a debt swap into equity of Sunac Services Holdings.

Shares of Sunac China have plunged nearly 70 per cent since resuming trading two months ago in Hong Kong. BLOOMBERG