According to sources, Deutsche Bank is preparing to file a liquidation lawsuit against property developer Shimao Group.
Reuters quoted two sources on Friday (March 1) as saying that Deutsche Bank, one of the creditors of Shimao Group, considered filing a petition with the Hong Kong court this month to liquidate Shimao after finding Shimao's debt restructuring terms unacceptable.
Headquartered in Shanghai, Shimao Group is one of the top 20 property developers in China. In July 2022, Shimao Group defaulted on its debt after failing to pay the principal and interest of US$1 billion of its offshore bonds.
Shimao Group had restructured its offshore debt totaling US$11.7 billion, but after 18 months of negotiations, Shimao was unable to reach an agreement with creditors.
Shimao Group proposed a debt restructuring clause in December, proposing to convert part of the debt into new loans with maturities of up to nine years, among other things, to reduce offshore debt by up to $7 billion, but creditors refused, the sources said.
Deutsche Bank's loans to Shimao Group are mostly private dollar bonds, but the amount of this dollar bond is unclear, according to a source.
Shimao Group announced in December last year that as of June 30 last year, the group's overseas interest-bearing debt was about US$14 billion, domestic interest-bearing debt was about US$25 billion, the amount payable to related parties was about US$3 billion, and the total equity was about US$9 billion, and the non-controlling equity was about US$6 billion.
According to the announcement, in the past few months, the group has actively promoted the proposed restructuring of overseas debt, and the overseas debt restructuring plan involves a total principal of about 11.7 billion US dollars.
Reuters reported that Deutsche Bank's decision to file a lawsuit against Shimao Group would be the first time since the property sector fell into a debt crisis in 2021 that a major foreign finance company has filed a liquidation lawsuit against a Chinese developer.
As the real estate crisis continues to ferment, more and more Chinese real estate companies that have defaulted have been brought into liquidation. According to Reuters, at least 10 real estate companies are currently facing liquidation lawsuits in Hong Kong and other overseas courts.
Country Garden, another large private real estate company, also filed a winding-up petition on Tuesday (February 27) by Ever Credit Limited, a subsidiary of Hong Kong-listed Kingboard Group, for failing to pay an unpaid term loan with a principal amount of about HK$1.6 billion and accrued interest.