China Evergrande cancels court hearings for debt plan as developer, creditors seek to revise US$20 billion restructuring deal

Name: Boom, bust and borrow: Has China’s housing market tanked?
Uploaded: 2023-10-20T07:35:45.000Z
Duration: 10 min 57 s
Description: Boom, bust and borrow: Has China’s housing market tanked?

Hearings scheduled for October 16 and 17 that were cancelled would have put the final seal of approval on the developer’s US$20 billion workout deal

Evergrande last month said home sales had missed forecasts, while its founder’s sudden ‘arrest’ has surprised some offshore creditors

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The offices of China Evergrande Group in Shenzhen. Photo: Reuters

SCMP Reporter

Published: 3:35pm, 20 Oct 2023Updated: 4:08pm, 20 Oct 2023

China Evergrande Group has scrapped several court hearings that were previously scheduled in Hong Kong to approve its US$20 billion debt restructuring with several classes of offshore creditors, after the defaulting developer sought to revise terms.

Several other court hearings in other offshore jurisdictions on the same matter were separately adjourned, the developer said in a stock exchange filing on Friday. An October 25 hearing in New York related to its Chapter 15 bankruptcy protection has also been postponed.

The decision to cancel the approval hearings followed a breakdown this month in its debt agreements that forced both parties to backtrack from the home stretch. Evergrande is seeking to reassess terms, citing weaker-than-expected home sales. The sudden “arrest” of its founder and chairman, Hui Ka-yan, by mainland Chinese authorities has also complicated the matter.

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Boom, bust and borrow: Has China’s housing market tanked?

After consultations with its advisers, “the company is revising the terms of the proposed restructuring to meet [its] objective situation and the demands of the creditors”, Evergrande said in its filing. It did not disclose any new proposal or when it could be ready.

Walking back the agreement will undo more than two years of efforts and negotiations to keep the developer afloat. Evergrande hired outside financial and legal advisers in September 2021 to overcome its debt burden. Snce then, its total liabilities ballooned by about 20 per cent to 2.4 trillion yuan (US$327 billion at the end of June 2023.

Offshore creditors are seeking to recover about US$20 billion in debt and claims against Evergrande after the Guangzhou-based developer defaulted on its obligations in late 2021, triggering the biggest debt reorganisation in China that is still ongoing amid a three-year housing market slump.