Analysis-China Evergrande subsidiary dealings raises prospects for offshore creditors
) might be able to increase their chance of recovering funds if they can prove the property developer is due money from onshore subsidiaries, to which they would therefore be entitled, experts said.
"Offshore creditors who can prove Evergrande lent money to these onshore restructured businesses have a legal right to claim back money, based on experience," said Glen Ho, Deloitte China's national turnaround and restructuring leader. Evergrande liquidators - appointed by the Hong Kong court to represent offshore creditors - declined to comment. Its flagship onshore operation Hengda Real Estate declined to comment.
It also raises the possibility of offshore creditors filing proof of debt between Evergrande and other subsidiaries, and pursuing funds by pushing for those units' restructuring, experts said. Even so, recovery will be challenging, they said. Moreover, being designated de facto shareholders of the subsidiaries, offshore creditors rank below those onshore so they will struggle to recover anything at all, said a restructuring expert in Hong Kong, declining to be identified as they were not authorised to speak with media.
Still, it is important that offshore investors are involved in government-led bankruptcy processes, and to ensure those process are transparent, said Qiao Shitong, a professor specialising in property law at Duke University's Law School.
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