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.
David Billington, a restructuring partner at Cleary Gottlieb Steen & Hamilton LLP, said creditors might have some other options. However, the nature of the issuers and the invisible hand of authorities can prove a stumbling block, said Karl Clowry, restructuring partner at Addleshaw Goddard in London.
Tewoo Group completed an exchange and tender offer for its four US-dollar bonds in December 2019 while the firm's onshore in-court debt restructuring was approved around a year later.
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