Last month, the Chinese property developer said it would be unable to issue new debt due to a regulatory investigation, scuppering its planned restructuring path.
However, bondholders represented by investment bank Moelis and law firm Kirkland and Ellis argued that Evergrande’s position its restructuring cannot be implemented for regulatory reasons “just does not add up”.
“It is difficult to believe that [the regulator] would actually stop a distressed company from restructuring,” the group said.
The news from Evergrande had come as a “complete surprise” to bondholders, they said in a statement today (9 October), as adding they had not been given any documents or filings from Evergrande, despite repeated requests.
Evergrande’s share price fell as low as 12.7% today, and has dropped 80.9% year-to-date, according to data from Morningstar Direct.
The bondholders urged Evergrande to seek a resolution from regulators to allow the restructuring to proceed, arguing it was “the only way the cloud of uncertainty surrounding the regulatory issues can be resolved”.
“Until then, the base case is that China Evergrande Group will be liquidated at the next winding up hearing on 30 October 2023,” they said.
This “uncontrolled collapse” would lead to a “catastrophic effect on the fate of other similarly situated Chinese companies”, they warned.
The firm revealed in July that it had lost £62bn across 2021 and 2022, in its delayed annual results.
Last month, the firm said that its founder Hui Ka Yan was being investigated over unspecified crimes.
