Sunac Says Unable to Meet Debt Deadline in Wake of Fresh Wind-Up Petition by China Cinda

Sunac’s counsel will be trudging back to Hong Kong’s High Court

Sunac China Holdings on Thursday received a winding-up petition in Hong Kong’s High Court filed by state-owned “bad bank” China Cinda Asset Management, with the HKEX-listed developer indicating in a statement to the stock exchange late Friday that it will not be able to repay its creditors on time.

The Petition may prompt other creditors of the Group to demand acceleration of payment of the relevant indebtedness owed to them or to pursue enforcement action,” Sunac said in the exchange announcement. “The Company expects that it will not be able to meet other offshore payment obligations when due or within the relevant grace periods, including but not limited to those under the U.S. dollar securities issued by the Company.”

A hearing on the petition will be held on 19 March, according to records for case number HCCW 16/2025 on the Hong Kong judiciary’s website. The named parties are China Cinda (HK) Asset Management Co Ltd and Sunac China, with the developer acknowledging the legal case in a statement to the Hong Kong exchange on Friday.

Sunac, which had received court approval in October 2023 for a plan to restructure its $10.2 billion in debt, vowed in the statement to oppose the wind-up petition vigorously, while cautioning that the court had not yet ordered the company to be wound up. Sunac shares finished the week at HK$1.30 ($0.17) each, having lost nearly 42 percent of their value.

Restructuring Redux
Requesting patience and support from its creditors, Sunac indicated that it may need to seek a new debt deal, in light of the move by China Cinda and weak mainland housing demand.

Sunac China chairman Sun Hongbin (Getty Images)

“In addition, given the impact of the Petition on the Company, and considering that the current market conditions are significantly below the expectations when the prior offshore debt restructuring plan was formulated, the Company does not exclude seeking a more comprehensive holistic offshore debt solution based on the actual situation,” the statement read.

The legal setback comes after Reuters reported on 6 January that Sunac had received sufficient support from holders of eight of its 10 RMB bonds to cut its onshore bond debt by more than half, with the company still needing approval from holders of all 10 onshore bonds worth RMB 15.4 billion ($2.1 billion) to implement the onshore restructuring plan.

China Cinda’s filing is the second winding-up petition received by Sunac since September 2022, when an individual named Chen Huaijun launched case number HCCW 319/2022 against the Tianjin-based builder. The Chen case was ultimately withdrawn in June 2023.

Sunac’s announced its latest setbacks on a challenging day for indebted mainland developers, with Evergrande Property Services, the property management division of China Evergrande Group, announcing to the Hong Kong exchange on Friday that a Guangzhou court had ordered its parent company to repay RMB 13.4 billion ($1.83 billion) owed to domestic creditors.

On the same day, a Hong Kong court ruled that CEG Holdings BVI Ltd, an offshore unit of Evergrande Group which owns nearly half of Evergrande Property Services, should be wound up, according to an account by Bloomberg. The Hong Kong action comes as Evergrande’s liquidators continue efforts to access assets after the developer was ordered to be wound up in January 2024.

Continuing the end of the week disclosure wave, mainland developer Shimao Group informed the Hong Kong exchange that it had been hit with a fresh winding up petition from a unit of mainland bank China Merchants Bank. That action follows Shimao having succeeded in December in winning dismissal of a winding up petition from a unit of China Construction Bank.

Also on Friday, Nanjing-based developer Redsun Properties disclosed to the Hong Kong bourse that it would not make payment on $350 million in bonds and interest maturing on 13 January. The company, which in September won deferral of a Hong Kong winding up petition until March, had warned of the impending default on the bonds in earlier announcements.

Misery Loves Company
After 2024 kicked off with the court-ordered liquidation of property giant China Evergrande, several mainland peers were compelled to answer winding-up petitions throughout the year.

In February, Country Garden Holdings was hit with a winding-up petition in Hong Kong filed by a unit of Kingboard Holdings, due to non-repayment of a term loan worth HK$1.6 billion ($204 million) including accrued interest. The hearing is currently adjourned until 20 January of the new year to give Country Garden time to assemble its debt restructuring plan, the broad strokes of which it outlined in a filing this week.

Sino-Ocean Group in June received a winding-up petition filed by Bank of New York Mellon relating to the Beijing-based builder’s failure to make payments on offshore bonds due in 2026 with a principal amount of $400 million. That same month, Hong Kong’s High Court gave Shenzhen-based Kaisa Group Holdings a seven-week reprieve to continue working on a debt restructuring plan in order to avoid liquidation.

In July, Guangzhou R&F Properties was served with a winding-up petition by Singapore’s SeaTown International in relation to non-repayment of a managed fund’s share of an outstanding loan with $613.66 million in principal and accrued interest.

Note: This story updates an earlier version to include information from statements late Friday by Sunac China and information concerning China Evergrande Group, Shimao Group and Redsun Properties.