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A construction site by Chinese property developer Kaisa Group at an area of downtown Shanghai on February 17, 2015. Photo: Reuters.
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Hong Kong court pushes Kaisa’s liquidation case to August 12, giving developer a breather

  • The next hearing will be on August 12, Justice Peter Ng Kar-fai announced
China property
Yulu Ao
Yulu Ao
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Indebted Chinese developer Kaisa Group Holdings was granted another reprieve after a Hong Kong court on Monday adjourned a hearing, allowing the company more time to restructure its debts.

The next hearing will be on August 12, Justice Peter Ng Kar-fai announced, giving the Shenzhen-based developer more time to convince its debt holders and stave off liquidation. The Hong Kong court had adjourned the hearing several times, and the initial petitioner Broad Peak Investment dropped out from the case on March 8.

There is “no excuse” for another adjournment next time if no proposal is put forward between now and then, the judge said.

Citicorp International, as the trustee of an ad hoc group of bondholders, has replaced the Singapore-based hedge fund company to become the latest petitioner. It filed a petition after the developer failed to repay US$750 million in notes, according to Kaisa’s filings to the Hong Kong stock exchange.

Kaisa Group’s chairman and executive director Kwok Ying-shing during a press conference in Hong Kong in March 2017. Photo: Jonathan Wong

Kaisa had 226.4 billion yuan of total liabilities and 232.8 billion yuan of total assets at the end of December 2023, according to its annual results.

The Shenzhen-based company has tried to restructure its debt for more than two years after defaulting on some US$12 billion of offshore debt since late 2021. It was the second-largest issuer of offshore bond among Chinese developers after China Evergrande Group, and the first among its peers to default on offshore bonds in 2015.

Kaisa’s chairman Kwok Ying-shing returned to Shenzhen earlier this year, where the company is based, to hold talks with local officials, according to separate reports by Reuters and the Chinese media outlet Caixin. He later inspected several of Kaisa’s projects in Beijing, Guangzhou and Huizhou in late February and early March, according to the reports.

It was the first time that Kwok had returned to the mainland since the developer’s first dollar-bond default in 2015. It restructured its debt in 2016 before missing another payment in late 2021 as China’s property industry sank deeper into a US$160 billion crisis brought on by the central bank’s so-called “three red lines” deleveraging campaign.

Shares of Kaisa fell by as much as 5.8 per cent before closing at 13 Hong Kong cents, extending their losses this year. The Hang Seng Mainland Properties Index, a gauge tracking 10 Chinese home builders listed in Hong Kong, fell 0.5 per cent.

The case is among a wave Chinese developers that face the prospect of being liquidated, after Evergrande’s restructuring plan failed to convince its investors and was ordered to wind up in January.

Dexin China Holdings, a Zhejiang-based developer, received a winding-up order from a Hong Kong court two weeks ago, extending the list of developers that have failed to convince creditors of their restructuring plans.

DaFa Properties Group, a Shanghai-based developer, got an adjournment from a Hong Kong judge on a winding-up petition on Monday. Shimao Group Holdings faces a court hearing on Wednesday on a winding-up suit filed by China Construction Bank. Country Garden Holdings faces a court hearing on July 29 on a liquidation petition.

Real estate sector had led bond defaults in China over the past five years, with 59 issuers defaulting on 319 offshore bonds and 49 issuers defaulting on 194 onshore bonds since 2020, when Beijing’s “three red lines” was introduced, according to an S&P analysis.

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