(Yicai) Nov. 21 -- The court in Hong Kong that was hearing property developer China Aoyuan Group's debt restructuring plan at the end of last month did not dismiss the objection raised by China Ping An Insurance Overseas Holdings, according to the unit of Chinese insurance giant Ping An Insurance Group.

The court did not dismiss Ping An Insurance Overseas' claim but decided to continue the review at the admission hearing scheduled on Jan. 8, given that time was not enough after hearing the claim and basis, Ping An Insurance Overseas told Yicai yesterday, adding that it will accept suggestions from its legal advisor to exercise legal rights of a creditor.

Ping An Insurance Overseas objected to Aoyuan's offshore debt restructuring plan during a public hearing in Hong Kong last month, a source told Yicai on Nov. 19, adding that the judge dismissed the objection, requiring more materials to prove the rationality of the move.

Ping An Insurance Overseas was not the only Aoyuan creditor opposing the restructuring publicly, the firm said. Many institutional creditors jointly supported Ping An Insurance Overseas' objection at the public hearing on Oct. 31, it added.

Guangzhou-based Aoyuan classifies its creditors into intercreditor agreement and non-ICA creditors, effectively dividing the restructuring scheme into two, with relatively visible differences in debt recovery ratios, according to the restricting agreement reached before.

The objection raised may claim that some creditors think the existing scheme is unfair, a capital market insider familiar with Aoyuan's debt restructuring told Yicai.

Ping An Insurance Overseas' objection to Aoyuan's debt restructuring scheme is likely to disturb the developer to some extent, an insider close to Aoyuan told Yicai.

Aoyuan can only wait for liquidation if the restructuring efforts fail and no other feasible choices are available, according to an industry insider familiar with the company's debt restructuring plan. Ping An's move is harming the interests of Aoyuan and all creditors, they added.

But according to the capital market insider, liquidation cannot happen automatically, and someone needs to actually do it. In theory, Aoyuan can still propose a new scheme to continue negotiations with creditors if the existing one fails to pass.

Aoyuan will hold a debt repayment meeting with creditors on Nov. 28 to vote on the existing restructuring scheme, the company said in a filing on Nov. 7, citing orders from the High Court of Hong Kong Special Administrative Region and the Grand Court of the Cayman Islands on Oct. 31, despite the objections to the scheme.

If half of the creditors attending the meeting and more than three-fourths of the total credit vote in favor, the restructuring plan will pass. In this case, the scheme can be further advanced for actual execution, formally recognized, and approved in the courts' hearings on Dec. 7, Dec. 8, and Jan. 8.

In the first 10 months, Aoyuan delivered over 23,000 apartments, with other 20,000 houses expected to be delivered by the end of the year. Between July and October, Aoyuan's monthly sales averaged CNY1 billion (USD140.9 million).

Aoyuan defaulted on debts in January last year. As of the end of 2022, Aoyuan had offshore interest-bearing liabilities of about CNY42.8 billion (USD5.9 billion) and onshore interest-bearing liabilities of around CNY66.2 billion.

Editors: Shi Yi, Futura Costaglione