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Evergrande: Hui’s ‘arrest’ casts doubts on assets, support deal with creditors

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Evergrande crisis: Hui’s ‘arrest’ clouds debt-support deal with offshore creditors, access to assets

Hui and his offshore family vehicle Xin Xin (BVI) are sponsors of the restructuring support agreements with offshore creditorsHui agreed in March to pay fees to a committee representing creditors, and hired Baker McKenzie as personal counselChina propertyYulu AoPublished: 7:30pm, 29 Sep, 2023Why you can trust SCMP

China Evergrande Group’s US$20 billion debt workout plan is at risk of falling apart in the home stretch, as the “arrest” of Hui Ka-yan clouded the fallen billionaire founder’s capacity to deliver his obligations and warranties in several deals with offshore creditors.

Hui and his offshore family vehicle Xin Xin (BVI) are sponsors of the restructuring support agreements with a committee of foreign creditors, including global hedge funds and distressed-debt investors, according to official documents. The situation also raised question marks over access to his assets to pay legal advisers and creditors.

Hui, who turns 65 on October 9, has been placed under “mandatory measures” by Chinese authorities for unspecified crimes, the troubled developer said in a filing on September 28. The term typically refers to house arrest or movement surveillance, among other things, in local regulatory parlance.

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“In general, the restructuring proposal needs approvals and signatures of key people in charge,” said Raymond Cheng, managing director of CGS-CIMB Securities in Hong Kong. As the number one person in Evergrande, “[The fact] Hui’s missing will definitely have a huge negative impact on the restructuring process.”

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Hui and Xin Xin are sponsors of the restructuring support agreement with China Evergrande’s class A creditors, who held US$14.2 billion of claims tied to 10 defaulted US dollar-denominated bonds, one Hong Kong dollar convertible bond and one private loan.

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