CHINESE property developer Shimao Group said on Monday (Apr 8) that China Construction Bank (Asia) had filed a liquidation petition against it over a financial obligation of HK$1.6 billion (S$276 million).

Shimao said in a Hong Kong stock exchange filing it would “vigorously” oppose the lawsuit and press on with its proposed plan to restructure about US$11.7 billion of offshore debt, with an aim of cutting it by 60 per cent.

“The company is of the view that the petition does not represent the collective interests of the company’s offshore creditors and other stakeholders,” Shimao said.

China Construction Bank did not respond immediately to a request for comment.

The liquidation petition comes after similar action was taken by creditors against property sector giants China Evergrande Group and Country Garden.

China’s property sector has been in crisis since 2021 after a regulatory crackdown on high leverage among developers triggered a liquidity crisis. Mainland authorities have not rolled out massive stimulus to support developers, instead adopting a long series of incremental steps aimed at reviving the sector.

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Shanghai-based Shimao is among the many Chinese developers that have defaulted on offshore bonds, after it missed the interest and principal payment for a US$1 billion offshore bond in July 2022. After that missed payment, its entire US$11.7 billion worth of offshore debt is in default.

Shimao in March laid out detailed debt restructuring terms.

A group of major bondholders has already flagged its opposition to Shimao’s restructuring plans, which sources told Reuters was due to the size of the losses the creditors would face and the lack of upfront payments.

Shimao would require approval from more than 75 per cent in creditor value to pass its restructuring proposal. The ad-hoc bondholder group holds more than 25 per cent of Shimao’s outstanding US$6.8 billion dollar bonds. REUTERS