Evergrande’s debt crisis: International creditors threaten legal action over “opaque” restructuring process
They said in a statement on Thursday that they had to “seriously consider enforcement” after Evergrande failed to engage significantly with them in reorganizing operations.
The company’s “lack of commitment and opaque decisions to date is in breach of well-established international standards in restructuring processes of this magnitude,” the group wrote in its statement. The investors are represented by the law firm Kirkland & Ellis and the investment bank Moelis & Co.
They said the company̵[ads1]7;s behavior “hurts offshore investors’ view” of expecting fair treatment when investing in Chinese companies, adding that they are “prepared to take all necessary action to defend their legal rights and protect their legitimate interests.” “
The real estate developer is one of China’s largest and still has more than $ 300 billion in total liabilities, including about $ 19 billion in outstanding offshore bonds held by international asset managers and private banks on behalf of its clients.
But international bondholders say they have been left in the dark about the company’s plans. The creditors said in their Thursday statement that they have tried to talk to Evergrande, but have received “little more than vague assurances of intent, which lack both details and substance.”
“Actions speak significantly louder than words,” they added, adding that the “overall impression” is that despite the company’s public words, Evergrande has “disregarded its offshore creditors and the legal rights of its creditors.”
The group added that it acknowledges Evergrande’s recent efforts to resume most of its construction projects, and wants “to be part of a solution” to help “in these difficult times.”
Analysts have long been concerned that a collapse of Evergrande could trigger greater risk to China’s real estate market, damaging homeowners and the wider financial system. Real estate and related industries account for as much as 30% of the country’s GDP.
