Chinese Shimao receives wind-up petition in H. Kong

Chinese developer Shimao Group received a liquidation petition from China Construction Bank (Asia) against it in Hong Kong due to unpaid debts, Reuters reported on Monday, citing the company’s filling on Hong Kong Stock Exchange.

This is a rare case of a state-owned bank taking legal action in the property downturn.

The petition is related to Shimao’s failure to repay loans totalling HK$1.58 billion ($201.75 million).

This contrasts with similar legal actions against other firms like China Evergrande Group and Country Garden for defaulting on their debts.

The loans include direct lending from China Construction Bank to Shimao and the bank’s participation in syndicated loans to the developer.

Shimao’s Hong Kong-listed shares fell by 18.7 per cent to a record low of HK$0.37.

Shimao stated that it will vigorously oppose the lawsuit and continue with its plan to restructure about $11.7 billion of offshore debt, aiming to reduce it by 60 per cent.

The company believes the petition does not represent the collective interests of its offshore creditors and stakeholders.

The first court hearing is scheduled for June 26 at the Hong Kong High Court, which oversees all liquidation processes in the city.