Chinese developer Logan’s liquidation lawsuit adjourned on potential new petitioner

By Clare Jim

HONG KONG (Reuters) -A group of banks may seek to take on the lawsuit to liquidate Chinese property developer Logan Group after the original petitioners told the court on Monday they would drop the case.

The latest development came after the Shenzhen developer said on Friday it had signed an agreement with a key bondholder group on the terms of restructuring its $6.6 billion in offshore debt.

The Hong Kong High Court on Monday adjourned the liquidation proceedings for four weeks to give the group of banks time to decide whether they would replace the original petitioners.

Logan said in a statement later on Monday that together with its financial advisors, it would continue to engage in active and constructive negotiations with other creditors to reach an agreement on the restructuring plan.

The original petitioners, holding Logan’s 5.75% 2025 bond, filed a winding-up petition against the developer and its two units in Nov. 2022 through Citicorp International, the bond trustee.

Logan, which stopped making offshore repayments in August 2022, said in a filing on Friday that the restructuring plan includes four options for creditors to swap part of their debt to cash, new notes and/or convertible bonds.

The company added it aimed to cut its offshore debt by between $2.6 billion and $3 billion as its estimated cumulative cash for offshore repayments is between $4 billion and $4.7 billion during the restructuring period.

Its shares firmed 5% on Monday, after they were suspended from trading on Friday.

A number of Chinese developers, including China Evergrande Group and Country Garden, have defaulted on their offshore debt and entered into restructuring processes since the sector was embroiled in a debt crisis since mid-2021.

During the hearing on Monday, Judge Anthony Chan said he found it “odd” that the group of banks did not get involved in the Logan discussions earlier and he did not want the case to drag on much longer.

A lawyer representing the banks told the court that Logan had provided little information on the restructuring terms prior to the announcement last Friday.

The lawyer did not disclose the name of the banks he represents nor the amount of debt they hold in Logan.

Linklaters and PwC are advising the banks, according to Judge Chan. Sidley Austin, Kroll and Haitong International are advising Logan while PJT Partners and Freshfields Bruckhaus Deringer are advising the bondholder group.

(Reporting by Clare Jim; Editing by Anne Marie Roantree, Kim Coghill and Sonali Paul, Kirsten Donovan)