Chinese developer Shimao faces liquidation petition from state-owned bank

It plans to vigorously’ oppose lawsuit, press on with plan to restructure offshore debt

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Chinese property developer Shimao Group said on April 8 that China Construction Bank (Asia) had filed a liquidation petition against it in Hong Kong over a financial obligation of HK$1.58 billion (S$272.3 million).

It represented a rare decision by a state-owned bank to take legal action offshore against a mainland developer.

All the major legal processes against rival firms such as China Evergrande Group and Country Garden for defaulting on their debts were started by overseasbased creditors.

Shimao's Hong Kong-listed shares fell 18.7 per cent to hit an alltime low of 37 Hong Kong cents on April 8. The Hang Seng Mainland Properties Index was down 0.2 per cent.

Shimao said in a stock exchange filing it would "vigorously" oppose the lawsuit and press on with its proposed plan to restructure about US$11.7 billion (S$15.8 billion) of offshore debt, with an aim of cutting it by 60 per cent. The petition has been filed to the Hong Kong High Court, which oversees all liquidation processes in the city.