In a significant development, Sunac China Holdings Ltd. is edging closer to its groundbreaking offshore debt restructuring plan as it faces a crucial sanction hearing in Hong Kong. This landmark event marks a major milestone in the company's efforts to become the first major developer in China to address its extensive liabilities.

Source: https://asia.nikkei.com/

In a significant development, Sunac China Holdings Ltd. is edging closer to its groundbreaking offshore debt restructuring plan as it faces a crucial sanction hearing in Hong Kong. This landmark event marks a major milestone in the company's efforts to become the first major developer in China to address its extensive liabilities.

The sanction hearing, scheduled to occur in Hong Kong, serves as the primary legal battleground for global investors dealing with delinquent Chinese firms. During this hearing, a judge is expected to evaluate and make a ruling on Sunac's restructuring blueprint, which received overwhelming approval from creditors, representing 98 percent of the total claims that participated in the voting process just two weeks ago.

A favorable court decision would set Sunac apart from its major industry peers, such as China Evergrande Group, who are still grappling with the challenges of devising a viable debt-restructuring strategy amidst an unprecedented housing crisis in the country.

In 2021, Sunac stood as China's third-largest builder in terms of contracted sales. However, the government's efforts to curb real estate leverage growth triggered a sharp decline in new-home purchases and led to a liquidity crisis, resulting in record offshore bond defaults. Despite showing initial signs of recovery earlier this year, the industry has continued to weaken.

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Sunac, currently ranked 16th, initially defaulted on a dollar bond in May 2022 and unveiled its offshore debt restructuring plan in March of this year. The proposed plan encompasses approximately $10.2 billion in creditor claims, with $5.7 billion slated for compensation through the issuance of new dollar bonds. The remaining portion will be settled through the allocation of shares in its property-management arm and convertible notes.

To expedite the restructuring process, Sunac sought Chapter 15 bankruptcy protection in New York last month, a step occasionally necessary for finalizing such endeavors. Despite facing a 55 percent decline in its shares this year, the company's stock has more than doubled in value since the beginning of September, making it the top performer among Chinese developers.