Sidley represented Sunac China Holdings Limited (Sunac) in the restructuring of its US$10.2 billion offshore debt. Sunac and its subsidiaries are principally engaged in the property development and property investment business in the People’s Republic of China, with leading capabilities in Chinese real estate, cultural tourism, urban development, and integrated industrial operations.
The complex transaction was implemented through a scheme of arrangement in Hong Kong, which was sanctioned on October 5, 2023, and parallel Chapter 15 recognition proceedings in the U.S. District Court for the Southern District of New York (SDNY).
The scheme achieved widespread engagement, with a total of 2,019 creditors, representing 97.30% of the total value of scheme claims, attending Sunac’s scheme meeting on September 18, 2023. An overwhelming majority representing 98.30% of those present and voting at the meeting supported the scheme.
In accordance with the terms of the scheme, Sunac’s existing debt instruments were exchanged for a combination of convertible bonds, U.S. dollar-denominated notes, and, if voluntarily elected by creditors, mandatory convertible bonds and shares in Sunac’s subsidiary, Sunac Services Holdings Limited. Through this holistic restructuring, Sunac has successfully deleveraged its corporate group, thereforecreating a more stable capital structure to continue operations and increasing the prospects of generating long-term value for all stakeholders.
The restructuring became effective on November 20, 2023, and is a landmark deal. It is the largest offshore restructuring transaction completed by a Chinese property group and it achieved both the highest supporting rate and the highest deleveraging ratio of recent offshore schemes in this sector. The deal also marks a significant milestone for the Chinese property market, as Sunac is the largest of the wave of companies seeking large-scale debt restructurings to have successfully implemented one.
Throughout the restructuring process, Sidley constructively engaged with creditors to facilitate the formulation of a consensual restructuring proposal. Sunac’s restructuring showcases Sidley’s experience in advising Chinese real estate companies seeking large-scale debt restructuring of offshore liabilities and is another example of our ability to deliver complex deals in this market.
The multidisciplinary Sidley team was led by partners Christopher Cheng (China Corporate and Finance), Carrie Li (Capital Markets), and Jifree Cader (Restructuring). The transaction involved a cross-border team working across several practice areas and offices, including the following:
- Restructuring (London and Hong Kong): partners Mark Knight and Gordon Davidson, lead managing associate Molly Dyas, managing associate Raveena Channa, and trainee solicitor Priyanka Chandrakumar
- Restructuring (New York): partner Anthony Grossi, managing associates Juliana Hoffman and Julia Philips Roth, associates Nathan Elner, Raphael Rabinowitz, and LinLin Teng
- Capital Markets (Hong Kong and Beijing): senior managing associate Jacob Zhao, managing associate Sophie Gu, associates Robin Liu and Andy Loo, and senior legal assistant Jim Yan
- Litigation (Hong Kong): partner Desmond Ang, senior managing associates Sophia Tong and Dennis Wu, and managing associate Edwin Leung
- China Corporate and Finance (Hong Kong and Beijing): partner Olivia Ngan, counsel Alan Wong, senior associates Bryan Lo and Selina Wong, associate Nancy Yang, and legal manager Andie Lam
