Key Points
- The liquidation hearing for Sunac China (Rongchuang Zhongguo 融创中国) in Hong Kong has been rescheduled to August 25, 2025, allowing more time for restructuring efforts.
- The original winding-up petition was filed by China Cinda (Hong Kong) over an unpaid $30 million USD loan, although some other creditors reportedly oppose the liquidation.
- Sunac’s restructuring plan centers on a “full debt-to-equity swap” using two types of Mandatory Convertible Bonds (MCBs) with different conversion prices (HK$6.8 and HK$3.85).
- An equity structure stabilization plan aims to keep founder Sun Hongbin (Sun Hongbin 孙宏斌) significantly invested, with conditional, restricted shares issued to him alongside creditor MCBs.
- Sunac is working to implement the restructuring by December 31, 2025, signaling a critical period for the company and the wider Chinese property sector.
Key developments surrounding Sunac China’s (Rongchuang Zhongguo 融创中国) ongoing financial maneuvering, including a crucial postponement of its liquidation hearing.
High Court Hearing Pushed Back Amid Restructuring Efforts
Heads up, folks tracking the Chinese property market.
The liquidation hearing for major developer Sunac China (Rongchuang Zhongguo 融创中国) (Ticker: 01918.HK) in the Hong Kong High Court has been officially rescheduled.
Mark your calendars for August 25th, 2025.
This delay, announced on April 28, 2025, comes as Sunac’s legal team highlights significant strides made in its complex offshore debt restructuring process.
They emphasized achieving this progress within a relatively tight timeframe, signaling serious efforts to stabilize the P&L (Profit and Loss statement).
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The Original Petition & Creditor Dynamics
Let’s rewind slightly.
The whole liquidation saga kicked off publicly back on January 10, 2025.
China Cinda (Hong Kong) Holdings Company Limited (Zhongguo Xinda (Xianggang) Zichan Guanli Youxian Gongsi 中国信达（香港）资产管理有限公司) filed a winding-up petition against Sunac China in the Hong Kong High Court.
Why?
It boils down to an unpaid loan.
- Borrower: Shining Delight Investment Limited (an indirect, wholly-owned subsidiary of Sunac).
- Guarantor: Sunac China (Rongchuang Zhongguo 融创中国) itself.
- Lender: China Cinda (Hong Kong) Holdings.
- Amount Due: A principal sum of $30 million USD, plus interest that had piled up.
Interestingly, this liquidation push isn’t universally supported.
Reports indicate that some of Sunac’s other creditors actually oppose the winding-up petition.
This suggests a segment of creditors might believe restructuring offers a better recovery path than immediate liquidation – a crucial dynamic to watch.
Inside Sunac’s Offshore Debt Restructuring Plan
So, what’s Sunac’s game plan to get out of this tight spot?
They’ve rolled out a secondary offshore debt restructuring strategy centered around a “full debt-to-equity swap.”
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Here’s the breakdown:
- The Instrument: Sunac plans to distribute two types of new mandatory convertible bonds (New MCBs) to its creditors.
- Type 1 MCBs: These come with a conversion price set at HK$6.8 per share (approximately $0.87 USD). Creditors can convert these into equity starting right from the restructuring’s effective date.
- Type 2 MCBs: These have a lower conversion price of HK$3.85 per share (around $0.49 USD). Conversion for this batch kicks in later, specifically 18 to 30 months after the restructuring is effective. Importantly, this tranche won’t make up more than 25% of the total debt being restructured.
This debt-for-equity swap is a common tactic for heavily indebted companies.
It aims to clean up the balance sheet by reducing debt liabilities, while giving creditors a potential upside if the company’s stock recovers.
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Keeping Leadership Stable: The Equity Structure Plan
Beyond just swapping debt for equity, Sunac is also focused on maintaining stability at the top.
They’ve introduced an equity structure stabilization plan specifically designed to keep the major shareholder, founder Sun Hongbin (Sun Hongbin 孙宏斌), significantly invested and involved.
The rationale? The company believes Sun Hongbin’s continued leadership is vital for:
- Completing project deliveries (a huge concern in China’s property sector).
- Resolving debt risks effectively.
- Guiding the company’s long-term business recovery.
- Boosting confidence among stakeholders.
- Integrating resources more efficiently.
This plan, apparently suggested by some key consenting creditors, works like this:
- For every $100 USD principal of New MCBs allocated to creditors under the scheme, roughly $23 USD worth of additional New MCBs will be issued to Sun Hongbin (or his designee).
- These specific shares, once converted from the MCBs, are conditional and restricted. They only get released to Sun Hongbin upon meeting certain pre-agreed vesting conditions.
- Crucially: Sun Hongbin will have limited rights (like voting) over these restricted shares. He is explicitly barred from selling, pledging, or otherwise transferring them for economic gain for 6 years from the restructuring effective date, unless specific carve-outs are met.
This structure tries to balance incentivizing the key leader while ensuring creditors that his interests are aligned with the company’s long-term recovery, not short-term gains.
Timeline and Outlook
Sunac China (Rongchuang Zhongguo 融创中国) isn’t just planning; they’ve set a deadline.
The company has committed to using “reasonable efforts” to make sure the restructuring scheme becomes effective and fully implemented by December 31, 2025, at the latest.
This postponement and the details of the restructuring plan offer a critical window into the high-stakes negotiations and complex financial engineering happening within China’s embattled property sector.
The outcome of Sunac China’s restructuring will be closely watched by investors, policymakers, and other developers facing similar pressures.
FAQs
What is a liquidation or winding-up petition?
A winding-up petition is a legal action filed with a court, usually by a creditor, seeking to force an insolvent company into compulsory liquidation. If successful, the company’s assets are sold off to pay its debts, and the company ceases to exist. In Sunac’s case, China Cinda (Hong Kong) initiated this due to an unpaid loan.
Why is Sunac China (Rongchuang Zhongguo 融创中国) restructuring its debt instead of paying it?
Like many Chinese property developers, Sunac faced significant financial pressure and couldn’t meet all its debt obligations as they came due. Restructuring is an alternative to liquidation, allowing the company to renegotiate terms with creditors (like swapping debt for equity or extending payment timelines) to try and survive, recover, and eventually repay stakeholders, albeit potentially in a different form.
What are Mandatory Convertible Bonds (MCBs)?
Mandatory Convertible Bonds are debt instruments that *must* be converted into equity (stock) of the issuing company by a specific date or upon certain conditions being met. They are often used in restructurings because they automatically reduce a company’s debt load and increase its equity base over time, strengthening the balance sheet.
Who is Sun Hongbin (Sun Hongbin 孙宏斌)?
Sun Hongbin (Sun Hongbin 孙宏斌) is the founder and chairman of Sunac China (Rongchuang Zhongguo 融创中国). He is a prominent figure in China’s real estate industry. The restructuring plan includes specific provisions aimed at keeping him involved and incentivized, highlighting his perceived importance to the company’s turnaround prospects.
References:
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