Chinese creditors have sued collapsed property giant Evergrande for more than $13bn (£9.7bn) for alleged overdue payments.
A court has accepted 367 cases against Evergrande with claims totalling $13.2bn according to official records the FT first reported. The claims were filed after the company was officially declared to be in restricted default by Fitch Ratings.
“Creditors are racing to take Evergrande to court so they can be in a better position to get their money back in the event of a debt restructuring,” Bo Zhuang, a Singapore-based analyst at Loomis Sayles, told the FT. “This is especially true when not all borrowings are treated equally.”
The surge in creditor claims began when China’s central bank criticised Evergrande management in August over its debt crisis causing sales to plummet and creating difficulties as the company tried to secure financing.
Ever since Evergrande has been buckling under the weight of $300bn in debt with the company failing to meet a 30-day grace period deadline to pay debts worth over £82m earlier this month. Beijing has since intervened in company management with state representatives taking the majority of seats on a new risk management committee.
Creditors will fight uncertain legal battles and it remains unclear whether funds can be recovered. A government policy adviser said that the exposure of banks to the company was probably worse than indicated because many were reluctant to come forward and make losses known by taking court action.