By Clare Jim
HONG KONG (Reuters) -A Hong Kong court on Monday said it will hold sanction hearings on Sept. 5-6 to decide whether to approve an offshore debt restructuring plan by embattled property developer China Evergrande Group.
Evergrande, the poster child of property sector crisis in China, has $330 billion in liabilities making it the world's most indebted developer. A default in late 2021 led to a string of defaults in the sector and uncompleted homes across China.
The firm will send out a detailed electronic package of restructuring terms and information to offshore creditors for them to vote on in August, its lawyer told a convening hearing on Monday.
Citing an updated analysis commissioned from consultancy Deloitte, Evergrande said the asset recovery rate from its proposed debt restructuring plan would be around 22.5%, compared with 3.4% should the developer be liquidated.
It announced the restructuring plan in March, proposing to creditors a basket of options to swap debt for new bonds and equity-linked instruments.
Evergrande last week posted a combined loss of $81 billion for 2021 and 2022 and a rise in liabilities in its long-overdue financial results announcement, raising investor questions about the viability of its restructuring plan and operations.
Responding to the judge's question on how the recovery rate was derived, Evergrande's lawyer from Sidley Austin said it was an estimate relying on assumptions, depending on how creditors pick equity options, and whether the developer eventually repays creditors.
"Ultimately, it depends on the group's ability to generate cashflow and its business operation onshore," said the lawyer.
A separate convening hearing will take place at a Cayman Islands court on Tuesday.
Evergrande, needing more than 75% in creditor value in each debt class to pass the plan, in April said 77% of holders of class-A debt and 30% of holders of class-C debt had submitted support, among others.
Evergrande also faces a hearing next Monday about a winding up petition filed against it. A decision in that hearing will depend on the restructuring process.
(Reporting by Clare Jim; Editing by Jamie Freed and Christopher Cushing)
