LONDON/HONG KONG : With China Evergrande Group's default deadline drawing closer, offshore bond investors in the property developer are pondering their legal options to safeguard their investments.
The way many market participants worked around the lack of a guarantee was by using keepwell deeds - an undertaking to bondholders, and the offshore SPV which issues the debt, that the parent will make sure the SPV maintains a positive net worth and remains solvent. But in a separate case, an offshore bondholder in CEFC Shanghai International Group Limited , who filed a claim in Hong Kong against the company for breach of the keepwell deed, secured a default judgment in its favour.
"Instead of enforcing the keepwell itself, the bondholders could put the offshore issuer company into liquidation or other insolvency process," Billington said. "Evergrande is almost like a quasi-sovereign debt restructuring in that the significant stakeholders and the authorities are no doubt dictating what should be done, although with the sponsor still in place," he said.WHAT ARE THE CHANCES OF OFFSHORE BONDHOLDERS MAKING CASH RECOVERY?
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