The pressure on the Chinese real estate developer Shimao is increasing. China Construction Bank has filed a winding-up application, the company said. Shimao will vigorously defend itself against the lawsuit and continue to pursue plans to restructure its foreign debt of around $11.7 billion. The goal is a reduction of 60 percent.
“The company believes that the application does not represent the collective interests of the company’s foreign creditors and other stakeholders,” the company said. China Construction Bank filed the application for a commitment of approximately $200 million. Shares listed in Hong Kong lost over eight percent in early trading.
According to insiders, Deutsche Bank was considering a similar measure. Two insiders said at the beginning of March that she viewed the restructuring plan as unacceptable. Shimao was unable to service an expiring bond with a volume of one billion dollars in July 2022. This means that the entire foreign debt is considered to be in default.
The real estate sector in China has been in crisis since 2021, since the authorities tightened their requirements and abruptly stopped the debt-driven construction boom. At least 10 bankruptcy filings have been filed against Chinese developers in Hong Kong and elsewhere, according to Reuters calculations. Most recently, a judge in Hong Kong ordered the liquidation of China Evergrande, the most indebted real estate developer.