China’s Kaisa Group Liquidation Hearing Postponed by Court

A security guard stands on duty at the gate of a real estate project under development by Kaisa Group Holdings in Hangzhou in eastern China's Zhejiang province, on Jan. 16, 2015. (Chinatopix via AP)

A Hong Kong court on Monday adjourned a hearing for a petition seeking the liquidation of China’s Kaisa Group until Sept. 9. This comes after a judge in June gave the developer a seven-week adjournment to work out a restructuring plan, stating there was no excuse to have no progress by Aug. 12.

Citicorp International is the petitioner, after a former petitioner withdrew in the spring. The bank is a trustee of a major group of bondholders in Kaisa, which defaulted on $12 billion in debt late in 2021.

The adjournment gives Kaisa yet more time to try to reach a debt restructuring agreement with bondholders. The company’s senior adviser LL Tam told the court they hoped to accomplish this in under a month.

Kaisa is a Shenzhen-based real estate developer, and one of several such Chinese developers to suffer financial collapse in the last several years.

Kaisa is the second largest offshore debt issuer among Chinese developers after China Evergrande Group, which was the first of the major developers to default on dollar bonds. Evergrande was ordered to liquidate earlier this year.

Asset Recovery?

As the Chinese real estate market continues to deteriorate, creditors have been suing Chinese developers in hopes of recovering assets, though most are still in negotiations over debt restructuring plans that could prevent the need for court-ordered liquidation, which would still only recover a fraction of the assets.

China Evergrande Group is one of the few developers that have been ordered to liquidate after more than two years of being unable to offer a concrete restructuring plan on $300 billion in liabilities. Liquidators are hoping to recover $6 billion from executives.

“It is time for the court to say enough is enough,” Hong Kong High Court Justice Linda Chan said when she issued the historic order.

However, Natixis senior economist Gray Ng said challenges remain for investors and creditors.

“As most of Evergrande’s assets are in mainland China, there are uncertainties about how the creditors can seize the assets and the repayment rank of offshore bondholders, and the situation can be even worse for shareholders,” said Ng.

Another real estate giant, Country Garden, also had its liquidation hearing recently delayed, until Jan. 20, 2025. The developer defaulted on $11 billion in offshore bonds last year and is one of many such companies still in debt restructuring talks with creditors.

Reuters contributed to this report.