Shimao gets more time to restructure debt after beating back liquidation petition in court

Shimao faced liquidation petition from Hong Kong branch of state lender CCB over unpaid borrowings

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Shimao Tower in Shanghai. Photo: Reuters

Published: 7:00pm, 2 Dec 2024

Shanghai-based developer Shimao Group prevailed in a Hong Kong court decision to dismiss a creditor petition to liquidate the company, which will give the struggling home builder more time to restructure its US$11.5 billion in offshore debt.

Shimao is currently seeking creditor approval for its latest offshore debt restructuring plan, with a hearing at the High Court of Hong Kong slated for January 16, the developer said in a stock exchange filing last week. It added that it reached an agreement with its creditors to extend the final deadline for debt settlement to no later than June 30 from the end of this year.

In April, Shimao said it was facing a liquidation petition from the Hong Kong branch of state lender China Construction Bank over HK$1.58 billion (US$203 million) in unpaid borrowings. The home builder has received two reprieves since the case was first heard on June 26.

Many of China’s property developers, mired in debt, have taken to the courts in an effort to restructure their obligations. The nation’s home builders have been caught in a liquidity crisis since late 2020, when Beijing introduced regulatory guidelines relating to the ratio of debt to cash, equity and assets. And in late 2021, China Evergrande, once the largest real estate developer in China, defaulted on its debts.

On Monday in Hong Kong, Shimao shares closed 8.1 per cent higher at HK$1.20.

On November 25, Beijing-based Sino-Ocean – which had defaulted on US$6.1 billion in offshore borrowings – said it received partial approval from overseas creditors on a new plan to restructure US$5.64 billion of its debt. An initial plan, involving an average haircut of 63 per cent for creditors, was nixed in August.