Struggling Chinese property giant Evergrande is trying to secure the support of its foreign creditors to fight a winding-up suit filed against it by Top Shine Global Ltd in a Hong Kong court, according to a source familiar with the matter.
Evergrande, which is believed to have defaulted on almost $23 billion in foreign debt payments and is working on a plan to restructure its total debt, aims to file evidence in court that it has, among other things, the support of its creditors and wants to achieve this before the first hearing of the liquidation action on August 31, according to the same source.
It is noted that last week Top Shine Global Ltd, an investor in Evergrande’s Fangchebao subsidiary, announced that it has filed for liquidation of the real estate developer as the latter did not comply with the agreement to buy back Fangchebao shares from Top Shine.
A positive ruling on the winding-up petition could adversely affect the property developer’s debt restructuring plan, reducing the value of its overseas assets that are critical to the interests of its offshore creditors.
According to the same source, Evergrande is not currently considering the possibility of an out-of-court settlement with Top Shine, as – as it emphasizes – the vast majority of its creditors oppose the liquidation application, without giving further details.
Law firm Kirkland & Ellis and investment bank Moelis & Co, advisers to some of Evergrande’s main creditors, declined to comment on the matter, as did the Chinese company itself, while Top Shine was not immediately available for comment.
The lawsuit against Evergrande is the first of its kind against the Chinese giant, which has a total debt of more than $300 billion.
Evergrande, the biggest real estate developer by sales, said last week that Top Shine had filed for liquidation for failing to meet a $110 million financial obligation, adding that it would “vigorously” oppose the lawsuit.
The Chinese company also added that the lawsuit will not affect its external debt restructuring plan, which is expected to be drawn up by the end of July.