Shimao Group secures adjournment in liquidation hearing amid revised restructuring efforts

The troubled Chinese property developer Shimao Group stated on Wednesday that a Hong Kong court had adjourned the winding-up petition against the company to August 12, allowing the group more time to work with creditors on a new, revised restructuring proposal.

Since 2021, when the Chinese property sector sank into the thick of a debt crisis, several developers have come under such liquidation lawsuits from creditors. This list already comprises an order to liquidate behemoth China Evergrande Group. In a very brief filing to the stock exchange, Shimao said, 'The High Court has further adjourned the hearing for the petition to August 12.'

The liquidation petition against Shimao was filed in April, owing to the default on loans amounting to about $200 million by China Construction Bank. The Shanghai-based developer, in 2022, defaulted on offshore debt of $11.5 billion. On its part, Shimao has just come up with better terms in its restructuring plan to woo the creditors, who had initially opposed the March proposal.

Add WION as a Preferred Source

The new terms comprise a minimum cash interest payment for the new notes, an enhancement of the guarantee and security package, and a lower conversion price for the mandatory convertible bonds of HK$6 per share from HK$8.50. Shimao also pushed back the deadline for an early consent fee for a fourth time – an inducement for creditors to get behind the plan – to August 30.

A parallel development: the liquidation hearing for smaller peer Times China has also been adjourned to August 12, as shown in a recent filing. On the same date, Kaisa Group will be back in court for the next liquidation hearing, possibly one of the last hearings before the Hong Kong High Court makes a ruling for the Shenzhen-based developer.

The adjournment marks Shimao's ability to work through its financial difficulties and negotiate a viable restructuring plan. The outcome will be of key significance not only to Shimao but also to the wider Chinese property market, which remains scarred by festering debt issues and liquidity crises.