Kaisa’s offshore debt restructure explained

Author: Brian Yap | Published: 3 Aug 2016

Chinese property developer Kaisa's restructuring process has finally come to an end, but investigations into the company’s unexplained cash payments - and the audit process - remain unfinished.

After failing to obtain creditor approval for its restructuring plan last February, Kaisa won support from over 80% of its offshore bondholders in March, and subsequently obtained US court protection.

But counsel on the deal have explained how accounting irregularities and limited audited financials created challenges for the implementation of the inter-conditional schemes of arrangements in Hong Kong and the Cayman Islands.

"Although these deficiencies were acknowledged in the explanatory statement, they were not ideal and added a level of complexity and uncertainty for scheme creditors," said Neil McDonald, partner at Kirkland & Ellis in Hong Kong, who acted for a steering committee of offshore bondholder creditors.

The Hong Kong-listed property developer failed to pay the interest due on its 2020 bonds in...