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Kaisa Says That Creditors Will Get Less Than 5% of Investment Back if Liquidated
October 11, 2023
Distressed Chinese property developer Kaisa Group said that creditors would get less than 5% of their investment back from them if forced into liquidation, as per Reuters citing a lawyer. He said that Kaisa was cashflow insolvent with a cash-to-short term debt ratio of 0.02. The lawyer represented a creditor named Broad Peak Investment that filed a winding-up petition suing Kaisa regarding non-payment of onshore bonds worth RMB 170mn ($23.28mn). Kaisa has applied to remove the petition, arguing that the bond contract was under mainland Chinese law and the creditor can not file a winding-up petition in Hong Kong. The judge has given 28 days for an expert evidence on whether the creditor has the authority to file the petition. Kaisa was the first Chinese developer to default on its dollar bonds in 2015 and at the time, underwent a restructuring. Again in December 2021, Kaisa was among the first developers to default during the latest property market meltdown. Kaisa has yet to announce a restructuring plan whilst most other developers have come out with plans.
Kaisa’s dollar bonds are trading at highly distressed levels 5-6 cents on the dollar.
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