Kaisa Group’s debt restructuring wins Deal of the Year in China Business Law Journal’s 2016 rankings

We are delighted to announce that Kaisa Group’s debt restructuring wins Deal of the Year in China Business Law Journal’s 2016 rankings.

Kaisa Group’s debt restructuring

CATEGORIES: Debt capital market; real estate; restructuring

LEGAL COUNSEL: Ropes & Gray and Tanner De Witt acted for Kaisa Group Holdings. Harneys advised Kaisa Group on Cayman and BVI law. Kirkland & Ellis and Mourant Ozannes advised the ad hoc steering committee of the bonds and convertible bonds issued by Kaisa Group. Clifford Chance, Mayer Brown JSM, and O’Melveny & Myers acted for the creditors and certain trustees. Walkers acted for bondholders of Kaisa Group.

KEY POINTS: The US$2.6 billion restructuring of Kaisa Group’s six tranches of offshore bonds and convertible bonds was one of the most high-profile restructuring cases of the past year. Kaisa is the first Chinese property developer to default on its debt, which is valued at more than US$10 billion, both onshore and offshore. The transaction became unique and complex because its defaulted offshore bonds and convertible bonds were widely held across a variety of investors, both institutional and private.

It was implemented through parallel schemes of arrangements in Hong Kong and the Cayman Islands. According to Tanner De Witt, the restructuring of Kaisa’s offshore debt through the use of schemes of arrangement was a positive development for restructurings in Hong Kong. The firm also notes complexity with issues arising in the restructuring that had not previously been addressed much in the Hong Kong courts, with either little or no Hong Kong authority guidelines to show the way.

According to Kirkland & Ellis, the eventual restructuring proposal was a result of a highly negotiated process, and its innovation demonstrated how offshore creditors could work with onshore debtors and lenders to negotiate a complex and multi-faceted restructuring of a Chinese company.

For more information see article: Tanner De Witt instructed on groundbreaking restructuring case: Kaisa Group Holdings Limited.

The deal description was first published in the 2016 December/2017 January issue of China Business Law Journal and reproduced with permission.

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.