Article/Intelligence
UPDATE 4: HK Court Adjourns CoGard Winding-Up Hearing to Aug. 11, Bank CoCom Says Disagreement Related to 2023 Security Package to Fail Restructuring if Unsolved
Mon May 26, 2025 03:01 AM ET: The Hong Kong High Court adjourned this morning, May 26, Chinese developer Country Garden Holdings’ winding-up hearing to Aug 11, 2025, at a hearing attended by Octus.
Justice Linda Chan, who presided over today’s hearing, allowed creditors liberty to apply for an earlier hearing date.
Justice Chan granted a possible earlier hearing after counsel to a co-ordination committee of seven bank creditors, or the CoCom, said it was “unable not to oppose to” any adjournment of more than three weeks, citing a disagreement in restructuring negotiations with Hong Kong-listed Country Garden.
The CoCom holds 49% of the outstanding principal of Country Garden’s three syndicated loans totaling $3.6 billion, according to counsel, adding that the restructuring is “bound to fail” without the CoCom’s support.
Country Garden released on April 11 terms of a proposal to restructure its around $14 billion offshore debt. The company has proposed to implement the restructuring via a two-class scheme of arrangement in Hong Kong with its syndicated loans as Class 1 debt, and its existing notes, convertible bonds and the Ever Credit bilateral loan (petitioning debt in the winder before court today) as Class 2 debt.
The CoCom’s disagreement with the company, which the committee’s counsel described in court as a “deep hole,” is related to a $178 million amount the bank lenders will receive under the proposed restructuring as compensation for sharing a security package – granted by Country Garden in 2023 – with Class 2 creditors under the restructuring.
Under the proposed restructuring, the $178 million is to be paid part in cash on restructuring effective date, or RED, and the remainder in installments by way of a loan after RED, according to the April 11-released RSA terms.
The CoCom has agreed to the $178 million amount of security compensation, but still disagrees with the company over “logistics and priority” over the compensation, according to counsel to trustee of Country Garden’s USD notes Citicorp International, instructed by an ad hoc group, or AHG, of noteholders holding 30% of the total $10.3 billion outstanding principal of developer’s USD senior notes and HKD convertible notes.
Parties did not elaborate on the “logistics and priority” disagreement at today’s hearing.
The CoCom’s counsel said the committee’s position regarding the “deep hole” is non-negotiable.
The AHG asked for the court to “place minimum weight” on the CoCom’s objection, as the banks are not opposing material RSA terms, counsel to Citicorp said.
According to Citicorp’s counsel, Country Garden granted the 2023 security package to banks only two weeks before the developer defaulted on its USD notes. Banks “commercially don’t have the ground to stand on to retain superior rights” over the security as it would “clearly be an unfair preference” towards bank lenders, the trustee’s counsel added.
Country Garden announced on Friday, May 23 that holders representing over 70% of the existing public notes have acceded to the RSA. In the April 11 announcement, Country Garden said it was still finalizing negotiations with the CoCom.
Counsel to the company today asked for a six-month adjournment, citing milestones listed in the RSA, which states that the developer aims to apply by mid-August for the scheme convening hearing, and that it targets to apply in October for the scheme sanction hearing. The bondholder AHG and the petitioner Ever Credit supported the six-month adjournment.
Justice Linda Chan adjourned the petition to Aug. 11, 2025, while allowing for creditors to apply for an earlier hearing should the company fail to meet its milestones.
The company will file affirmations to update the court on its restructuring progress at least seven days before the next hearing,
The petition is HCCW 116/2024. The petitioner Ever Credit Ltd. is a wholly owned subsidiary of Hong Kong-based building material maker Kingboard Holdings Ltd. and presented the petition in February 2024 over nonpayment of a HKD 1.6 billion term loan ($204.2 million).
Oldham, Li & Nie acts as solicitors for Ever Credit, Linklaters acts for Country Garden, Allen Overy Shearman Sterling acts for the CoCom, Kirkland & Ellis acts for the bondholder AHG, while Johnson Stokes & Master acts for the company USD notes’ trustee Citicorp.
A list of Chinese developers’ Hong Kong court hearing dates compiled by Octus is HERE.
UPDATE 3: Country Garden Confirms HK Winding-Up Hearing Adjournment to May 26
Mon Jan 20, 2025 07:24 PM ET: Hong Kong-listed developer Country Garden Holdings Co. Ltd. announced to the Hong Kong stock exchange on Jan. 20 that on the same day, with the support of creditors, the Hong Kong High Court approved the adjournment application by the company, and adjourned the winding-up petition hearing to May 26, confirming Octus’ prior story.
As the company announced in February 2024, the petitioner Ever Credit Ltd., a wholly owned subsidiary of Hong Kong-based building material maker Kingboard Holdings Ltd., presented the petition against Country Garden over nonpayment of a HKD 1.6 billion term loan ($205.6 million).
The petitioner sought an immediate winding-up order against Country Garden at the Jan. 20 hearing, citing concerns over repeatedly missed milestone dates promised by the company at previous hearings, as reported.
Country Garden earlier this month released a proposed framework to restructure its total $16.4 billion offshore debt, planning to reduce $11.6 billion debt principal by offering creditors five options to convert their in-scope debts into cash, mandatory convertible bonds, different new notes and/or new loan facilities. The company said it will continue to progress the holistic restructuring currently contemplated under the restructuring proposal in an orderly manner, according to the announcement.
UPDATE 2: HK Court Adjourns Country Garden Winding-Up Hearing to May 26; Co. Plans Term Sheet, RSA by February 2025
Sun Jan 19, 2025 10:24 PM ET: The Hong Kong High Court adjourned a winding-up hearing this morning, Jan. 20, against Hong Kong-listed Chinese developer Country Garden Holdings to May 26, 2025 at a hearing attended by Octus, to allow time for the company to negotiate with creditors on its offshore restructuring with permission for creditors to apply for an earlier hearing if no agreement has been reached with the company by the end of February.
The petitioner Ever Credit Ltd. is a wholly owned subsidiary of Hong Kong-based building material maker Kingboard Holdings Ltd. and presented the petition in February 2024 over nonpayment of a HKD 1.6 billion term loan ($205.5 million).
The petitioner sought an immediate winding-up order against Country Garden at today’s hearing, citing concerns over repeatedly missed milestone dates promised by the company at previous hearings. In a July 29 hearing, Country Garden had said it planned to have an agreed term sheet by the end of September 2024.
The company sought a four-month adjournment. The company’s counsel told the court that the developer expects to publish a term sheet, and hopefully a restructuring support agreement entered into with key groups of creditors, by the end of February.
Country Garden earlier this month released a proposed framework to restructure its total $16.4 billion offshore debt, planning to reduce $11.6 billion debt principal by offering creditors five options to convert their in-scope debts into cash, mandatory convertible bonds, different new notes and/or new loan facilities.
At today’s hearing, counsel to a co-ordination committee consisting of seven bank creditors, or the CoCom, holding about 48% of the outstanding principal of Country Garden’s three syndicated loans totaling $3.6 billion, supported the four-month adjournment.
The CoCom is currently negotiating with Country Garden regarding a release of the “2023 security package,” with which the company hopes to obtain more support for the restructuring. Banks want to be compensated for a release of the security package, counsel to the CoCom said.
An ad hoc group, or AHG, of noteholders holding 30% of the total $10.3 billion outstanding principal of developer’s USD senior notes and HKD convertible notes, asked for a four-week adjournment, according to counsel to Citicorp International, trustee of the USD notes. The AHG’s current negotiations with the company focus on the conversion price of the proposed new MCBs and security compensation amount.
Justice Linda Chan adjourned the petition for four months to May 26, 2025 at 9:30 a.m. before a companies judge, while allowing for creditors to apply for an earlier hearing should the company fail to reach an agreement with any creditor groups by the end of February.
The company will file affirmations to update the court on its restructuring progress by May 19, 2025, or two working days ahead if the hearing takes place at an earlier date.
The case number is HCCW 116/2024. Oldham, Li & Nie acts as solicitors for Ever Credit, Linklaters acts for Country Garden, Allen Overy Shearman Sterling acts for the CoCom, Kirkland & Ellis acts for the bondholder AHG, while Johnson Stokes & Master acts for the company USD notes’ trustee Citicorp.
A list of Chinese developers’ Hong Kong court hearing dates compiled by Octus is HERE.
– Ziyu Zhang
UPDATE 1: Hong Kong High Court Adjourns Hearing of Winding-Up Petition Against Country Garden to Jan. 20, 2025
Mon Jul 29, 2024 08:41 PM ET: Guangdong-based property developer Country Garden Holdings Co. Ltd. announced to the Hong Kong stock exchange on Monday evening, July 29, that earlier in the day, the Hong Kong High Court has approved the company’s adjournment application, and the hearing of the winding-up petition against the company filed by Ever Credit Ltd. is now adjourned to Jan. 20, 2025, confirming Reorg’s previous story. The adjournment had the the support of the co-ordination committee of bank creditors and an ad hoc group of bondholders, the announcement said.
As reported, the petitioner Ever Credit is a wholly owned subsidiary of Hong Kong-based construction material maker Kingboard Holdings Ltd. and presented the petition in February over nonpayment of a 1.6 billion Hong Kong dollars ($204.8 million) term loan.
Trading in Country Garden’s shares on the exchange has been suspended with effect from April 2 at 9 a.m. and will remain suspended until further notice, according to the announcement.
Original Story 9:59 p.m. UTC on July 28, 2024
BREAKING: Hong Kong High Court Adjourns Winding-Up Petition Against Country Garden to January 2025; USD AHG, Bank Creditor Committee Support Adjournment
At a hearing this morning, July 29, which Reorg attended, Hong Kong High Court Judge Linda Chan agreed for a winding-up petition against Country Garden to be adjourned to Jan. 20, 2025 at 9:30 a.m.
The petitioner Ever Credit is a wholly owned subsidiary of Hong Kong-based laminates maker Kingboard Holdings Ltd. and presented the petition in February over nonpayment of a HKD 1.6 billion term loan.
The company sought an adjournment of six months as it continues restructuring plan formulation. The company’s counsel told the court it plans to have a term sheet agreed by the AHG and the banks by the end of September, and a restructuring support agreement uploaded and made available to all creditors at the end of October. An application for sanctioning the scheme is planned for early 2025, according to the company’s counsel.
A committee of bank creditors supported the six-month adjournment, according to counsel to the banks. An ad hoc group, or AHG, of Country Garden’s offshore USD noteholders, supported a four-month adjournment, according to counsel to Citicorp, trustee of the USD notes, as creditors and court can assess at the end of November if the company has achieved the milestones. The petitioner’s counsel said it also supports a four-month adjournment.
The company will file affirmations to update the court on restructuring progress by Jan. 10, 2025.