Kaisa, Times China face Hong Kong court to avoid liquidation
CHINESE developers Kaisa Group Holdings and Times China Holdings will square off with creditors on Monday (Aug 12), seeking to avoid liquidation before a Hong Kong court where decisions against the sector are starting to pile up.
Sued by its creditors to liquidate after a 2021 bond default, Kaisa has been fighting against their efforts for about a year without publicly presenting a restructuring plan. The lack of progress drove judge Peter Ng of the court to warn the Shenzhen-based company in June that on Monday’s hearing might be its last chance to avoid being put into involuntary liquidation.
Guangdong-based Times China, which was sued for liquidation by creditor Hang Seng Bank in April, comes to the court with an in-principle agreement with creditors in hand and is hoping to buy more time to finalise its restructuring plan.
Any court order to liquidate, particularly for Kaisa, would amount to another jolt for the struggling industry that has yet to find its legs despite the government’s supportive measures. Kaisa, carrying US$32.7 billion in total liabilities, would then become the second largest Chinese developer to be liquidated after China Evergrande Group.
“You really have no excuse if there’s no progress,” Ng told Kaisa’s representatives during the June hearing. No further adjournment may be given, he said.
Kaisa, with about US$13 billion of offshore borrowings subject to restructuring, carries one of the largest debt loads in the industry.
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Its legal battle was triggered by a winding-up petition first filed by a Singapore-based hedge fund. The case was later taken over by a key creditor group. Those creditors held or controlled more than 35 per cent of Kaisa’s offshore borrowings, according to a company filing in October.
The parties had made some progress towards an in-principle agreement, the creditor group’s lawyer said in an April hearing.
In the October filing, the company said it proposed converting some debt into shares or exchanging into new US dollar-denominated notes, as well as disposing of assets, including urban redevelopment projects in the pipeline. Still, no additional, detailed restructuring terms so far have been publicly released.
Kaisa’s default was among the first signs of spreading woes in China’s property sector amid the pandemic after developers’ mounting debt and home-buyers speculation led to a string of repayment failures.
The company had earlier defaulted on its US dollar bonds in 2015, the first ever for any Chinese builder, before recovering.
Meanwhile, Times China, which had defaulted on two US dollar bonds in early 2023, has been communicating with its major creditors, including banks and bondholders, almost on a daily basis after receiving the petition, Bloomberg reported.
The court had delayed winding up hearings against Times China twice after the company’s agreement with a group of key creditors in June. BLOOMBERG
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