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.

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.

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.

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. 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.

Shimao Group secures adjournment in liquidation hearing amid revised restructuring efforts

Chinese property developer, Shimao Group is facing a legal challenge as China Construction Bank (Asia) filed a liquidation petition against it in Hong Kong over a financial obligation amounting to HK$1,579.5 million, equivalent to $201.75 million. <o:p></o:p>

This move marks a departure from the norm, as it is unusual for a state-owned bank to initiate legal proceedings against a mainland developer outside China's borders. <o:p></o:p>

The development had a ripple effect through the market, with Shimao's Hong Kong-listed shares dropping by about 8.8 per cent in early trading. <o:p></o:p>

Shimao Group vehemently opposed the lawsuit while saying that it would proceed with its plans to restructure about $11.7 billion of offshore debt, with the intention of slashing it by 60 per cent. <o:p></o:p>

The company noted that the liquidation petition does not align with the collective interests of its offshore creditors and stakeholders. <o:p></o:p>

The petition now awaits adjudication by the Hong Kong High Court, responsible for overseeing all liquidation processes in the city.<o:p></o:p>

Amidst the tumultuous situation, Shanghai-based Shimao finds itself caught up in other rampant issues within China's property sector. <o:p></o:p>

The industry has been in upheaval since 2021 following a regulatory crackdown on high leverage among developers, triggering a liquidity squeeze. <o:p></o:p>

Unlike previous instances where mainland authorities intervened with massive stimulus measures, the response has been characterised by incremental steps aimed at revitalising the sector. <o:p></o:p>

Shimao's troubles have been complicated by its default on offshore bonds, a tight spot shared by many Chinese developers grappling with financial distress. <o:p></o:p>

In July 2022, Shimao missed interest and principal payments for a $1 billion offshore bond, resulting in its entire $11.7 billion offshore debt being in default. <o:p></o:p>

Despite laying out detailed debt restructuring terms in late March, the proposal faces opposition from a group of major bondholders, citing concerns over potential losses and the absence of upfront payments.<o:p></o:p>

The recent incident indicates the continued uncertainties within China's property market. <o:p></o:p>

Recent data suggests a tentative stabilisation compared to the grim state in the preceding year. <o:p></o:p>

Figures from the National Bureau of Statistics reveal a 9.0 per cent year-on-year decline in property investment for the first two months of 2024, a major improvement from the 24.0 per cent fall recorded in December 2023. <o:p></o:p>

Similarly, property sales by floor area registered a 20.5 per cent decrease in January-February compared to a 23.0 per cent fall in December 2023. <o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

Chinese property developer, Shimao Group is facing a legal challenge as China Construction Bank (Asia) filed a liquidation petition against it in Hong Kong over a financial obligation amounting to HK$1,579.

Chinese property developer, Shimao Group is facing a legal challenge as China Construction Bank (Asia) filed a liquidation petition against it in Hong Kong over a financial obligation amounting to HK$1,579.5 million, equivalent to $201.75 million. This move marks a departure from the norm, as it is unusual for a state-owned bank to initiate legal proceedings against a mainland developer outside China's borders. The development had a ripple effect through the market, with Shimao's Hong Kong-listed shares dropping by about 8.8 per cent in early trading. Shimao Group vehemently opposed the lawsuit while saying that it would proceed with its plans to restructure about $11.7 billion of offshore debt, with the intention of slashing it by 60 per cent. The company noted that the liquidation petition does not align with the collective interests of its offshore creditors and stakeholders. The petition now awaits adjudication by the Hong Kong High Court, responsible for overseeing all liquidation processes in the city. Amidst the tumultuous situation, Shanghai-based Shimao finds itself caught up in other rampant issues within China's property sector. The industry has been in upheaval since 2021 following a regulatory crackdown on high leverage among developers, triggering a liquidity squeeze. Unlike previous instances where mainland authorities intervened with massive stimulus measures, the response has been characterised by incremental steps aimed at revitalising the sector. Shimao's troubles have been complicated by its default on offshore bonds, a tight spot shared by many Chinese developers grappling with financial distress. In July 2022, Shimao missed interest and principal payments for a $1 billion offshore bond, resulting in its entire $11.7 billion offshore debt being in default. Despite laying out detailed debt restructuring terms in late March, the proposal faces opposition from a group of major bondholders, citing concerns over potential losses and the absence of upfront payments. The recent incident indicates the continued uncertainties within China's property market. Recent data suggests a tentative stabilisation compared to the grim state in the preceding year. Figures from the National Bureau of Statistics reveal a 9.0 per cent year-on-year decline in property investment for the first two months of 2024, a major improvement from the 24.0 per cent fall recorded in December 2023. Similarly, property sales by floor area registered a 20.5 per cent decrease in January-February compared to a 23.0 per cent fall in December 2023. (With inputs from Reuters)

Liquidation suit hits China's Shimao Group over an unpaid $202 million loan

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Shimao Group secures adjournment in liquidation hearing amid revised restructuring efforts

Liquidation suit hits China's Shimao Group over an unpaid $202 million loan