BEIJING (BLOOMBERG) - Several Chinese lenders have been told they can file legal cases against embattled property giant China Evergrande Group in local courts, in an apparent easing of a restriction that required all such lawsuits to be handled in a single court, according to people familiar with the matter.
The move may help onshore creditors gain control of assets ahead of a looming debt restructuring. At least three lenders in Zhejiang province and Shandong province were told by courts last month that they can file the cases against the developer in their own jurisdictions rather than to a court in Guangzhou, where Evergrande has been based for decades, said the people, asking not to be identified discussing a private matter.
Some cases have already been accepted, said the people. Creditors have filed hundreds of lawsuits to the Intermediate People's Court of Guangzhou after China's Supreme Court in early August ordered all cases against Evergrande and its affiliates to be processed there.
The backlog and protracted process have led to slow progress for many banks, trusts and suppliers to seize assets and recover their losses. Evergrande, started 28 years ago by billionaire chairman Hui Ka Yan, officially became a defaulter in December and aims to provide creditors with a preliminary overhaul proposal by the end of July.
Both onshore and offshore investors are closely watching the development of what could be one of the nation's biggest restructurings, as they are prepared for a lengthy battle over who gets paid from what remains.
Evergrande did not immediately respond to a request seeking comment. Calls to the Supreme Court and the Intermediate People's Court of Guangzhou went unanswered.
The August order to centralise cases had given Evergrande some breathing room as it helped hold off creditors' attempts to freeze accounts while allowing the developer to complete more than one million unfinished homes. Smaller rival Kaisa Group Holdings in November flagged that it was also resorting to this approach to prevent assets being frozen by courts under numerous lawsuits.
However, the Guangzhou court alone cannot deal with hundreds of filings from the country, the people said. As at Dec 9, it has accepted 367 cases with claims totalling 84 billion yuan (S$18 billion), the Financial Times reported in December citing official records.
The latest change may allow creditors to gain faster control of Evergrande's real estate projects, many of which were being pledged for borrowings, said the people. Signs have already emerged that Evergrande is speeding up on disposing of stakes in some property projects. At least three trust companies have bought stakes in at least seven projects from Evergrande this year.
