China Evergrande gets court approval to hold a creditor meeting next month to win support for its US$20 billion debt restructuring

The world’s most indebted developer gets court approval to convene a creditor meeting next month to vote on its offshore-debt restructuring plan

The creditor assent will be subject to approval by the Hong Kong court in a sanctions hearing scheduled for September 4 and 5

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Published: 6:35pm, 24 Jul 2023Updated: 6:48pm, 24 Jul 2023

China Evergrande Group’s US$20 billion offshore debt restructuring proposal will be voted on by creditors during meetings scheduled for August 23 and 24.

The world’s most indebted developer, which last week reported a combined loss of US$81 billion for 2021 and 2022, got the consent to convene such a meeting from a Hong Kong court on Monday. If approved, the developer will need to return to the court on September 4 and 5 to seek its approval to proceed with the plan.

Evergrande is seeking to reorganise the most urgent portions of its 2.44 trillion yuan (US$340 billion) of liabilities after a 2021 default. Similar hearings will be held in the Eastern Caribbean Supreme Court on July 24 and in the Cayman Islands on July 25.

During the hearing, a lawyer for Evergrande told the court that under its proposal, the developer is likely to have an asset recovery rate of about 22.5 per cent, significantly higher than the 3.4 per cent estimated in November, should the company be liquidated, citing an updated analysis by Deloitte, a consultancy commissioned by the developer.

View of the China Evergrande Centre in Wan Chai, Hong Kong. Photo: Edmond So

The approval of the plan is crucial for Evergrande’s business and for the resumption in the trading of its shares on the Hong Kong stock exchange, suspended since March last year. The stock exchange warned the Shenzhen-based developer that it could be delisted should its shares remain suspended for an 18-month period, which expires in September.