Hong Kong: a key offshore bondholders group Of china evergrande plans to join a petition to end developer in a hearing hong kong court Two sources with direct knowledge said Monday.
Industry lawyers said the bondholder group has more than $2 billion of offshore notes guaranteed by Evergrande and its support in a winding-up petition against the world’s most indebted developer could increase the chances of an immediate liquidation order from the court.
The decision to wind down the developer, which has $300 billion in liabilities and $240 billion in assets, is likely to shock the already fragile Chinese capital and property markets, and given the multiple executives involved, the process could be complicated with potential political considerations. Is.
The ad hoc bondholder group, which also includes hedge funds, told the court this week of its plans to join the petition, said the sources, who declined to be named because the discussions were private.
Ad-hoc group financial advisers Moelis & Co and Evergrande declined to comment. Kirkland & Ellis, legal counsel for the bondholder group, did not immediately respond to a request for comment.
Evergrande defaulted on offshore loans in late 2021, becoming emblematic of the debt crisis that has engulfed China’s property sector.
It has been working on a $23 billion debt reform plan with an ad-hoc group for nearly two years. Its original plan fell through in late September when it said its billionaire founder Hui Ka Yan was being investigated for suspected crimes.
An ad hoc bondholder group was taking the developer’s side as opposed to liquidation petition Till the last hearing in early December.
Evergrande, seeking to avert impending liquidation, came up with a last-minute debt restructuring proposal before last month’s hearing.
The ad-hoc group of advisers, which were “strongly opposed” to Evergrande’s revised restructuring terms, said last month that the developer would be struck off in January if it did not come up with a plan accepted by all classes of creditors. .
Evergrande has not yet submitted any documents to the court ahead of the hearing on Monday, one of the sources said.
But from past experience, the company can still make last-minute proposals to the court and creditors just before the hearing, which could potentially change the position of the petitioners.
petitioner ownership
The petition was filed in June 2022 by Top Shine, an investor in Evergrande unit Fangchebao, saying the developer had failed to honor an agreement to repurchase shares it purchased in the subsidiary.
Winddown proceedings have been postponed several times, and Evergrande has argued in court that Top Shine represents only a small part of its total offshore debt.
Hong Kong High Court Justice Linda Chan had earlier said the December hearing would be the last hearing before deciding whether to liquidate Evergrande in the absence of a “concrete” restructuring plan, even though she granted another adjournment because Top Shine did not oppose it. did. step.
Samoa-registered Top Shine has had a change in ownership, with former owner Lin Ho Man telling Tencent News in an interview earlier this month that he will reduce his debt to Evergrande by selling Top Shine, without giving details about the new buyer. The stake was sold.
Lin, 32, told the online news media outlet that he was very young when he made the investment in 2021 and that he had “learned a lesson”.
Top Shine’s new owner has explored various options for a liquidation petition against Evergrande, including giving Evergrande more time to work on a revised restructuring proposal, a person familiar with the matter told Reuters.
Top Shine declined to comment.
Industry lawyers said the bondholder group has more than $2 billion of offshore notes guaranteed by Evergrande and its support in a winding-up petition against the world’s most indebted developer could increase the chances of an immediate liquidation order from the court.
The decision to wind down the developer, which has $300 billion in liabilities and $240 billion in assets, is likely to shock the already fragile Chinese capital and property markets, and given the multiple executives involved, the process could be complicated with potential political considerations. Is.
The ad hoc bondholder group, which also includes hedge funds, told the court this week of its plans to join the petition, said the sources, who declined to be named because the discussions were private.
Ad-hoc group financial advisers Moelis & Co and Evergrande declined to comment. Kirkland & Ellis, legal counsel for the bondholder group, did not immediately respond to a request for comment.
Evergrande defaulted on offshore loans in late 2021, becoming emblematic of the debt crisis that has engulfed China’s property sector.
It has been working on a $23 billion debt reform plan with an ad-hoc group for nearly two years. Its original plan fell through in late September when it said its billionaire founder Hui Ka Yan was being investigated for suspected crimes.
An ad hoc bondholder group was taking the developer’s side as opposed to liquidation petition Till the last hearing in early December.
Evergrande, seeking to avert impending liquidation, came up with a last-minute debt restructuring proposal before last month’s hearing.
The ad-hoc group of advisers, which were “strongly opposed” to Evergrande’s revised restructuring terms, said last month that the developer would be struck off in January if it did not come up with a plan accepted by all classes of creditors. .
Evergrande has not yet submitted any documents to the court ahead of the hearing on Monday, one of the sources said.
But from past experience, the company can still make last-minute proposals to the court and creditors just before the hearing, which could potentially change the position of the petitioners.
petitioner ownership
The petition was filed in June 2022 by Top Shine, an investor in Evergrande unit Fangchebao, saying the developer had failed to honor an agreement to repurchase shares it purchased in the subsidiary.
Winddown proceedings have been postponed several times, and Evergrande has argued in court that Top Shine represents only a small part of its total offshore debt.
Hong Kong High Court Justice Linda Chan had earlier said the December hearing would be the last hearing before deciding whether to liquidate Evergrande in the absence of a “concrete” restructuring plan, even though she granted another adjournment because Top Shine did not oppose it. did. step.
Samoa-registered Top Shine has had a change in ownership, with former owner Lin Ho Man telling Tencent News in an interview earlier this month that he will reduce his debt to Evergrande by selling Top Shine, without giving details about the new buyer. The stake was sold.
Lin, 32, told the online news media outlet that he was very young when he made the investment in 2021 and that he had “learned a lesson”.
Top Shine’s new owner has explored various options for a liquidation petition against Evergrande, including giving Evergrande more time to work on a revised restructuring proposal, a person familiar with the matter told Reuters.
Top Shine declined to comment.
(TagstoTranslate)Offshore bondholders group(T)Liquidation petition(T)Hong Kong court(T)Developer(T)China Evergrande