Wedoany.com Report-Apr. 17, Creditors of Chinese developer Xinyuan Real Estate have filed an involuntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of New York. The filing, led by bondholders Cithara Global Multi-Strategy, Mars Partner, and Star Freight & Trading, seeks to recover $65.8 million in unpaid bonds that matured in 2023.

Xinyuan’s US assets could potentially be liquidated to repay the outstanding bonds.

Xinyuan has encountered financial difficulties, including a missed interest payment in 2022 and a default on $170 million in bonds due in January 2024, according to the creditors’ documents. In June 2023, the company initiated a dollar debt exchange and appointed Alvarez and Marsal, a professional services firm, as its restructuring adviser. The creditors noted that Xinyuan holds assets in the U.S., which could be liquidated to address the outstanding debts.

In 2024, Xinyuan’s subsidiary, Hudson 888 Owner, filed for bankruptcy, with debts reported between $100 million and $500 million. Under U.S. bankruptcy law, creditors can request court oversight for a company failing to meet debt obligations. Xinyuan may choose to challenge the petition or accept bankruptcy proceedings to reorganize its finances. 

The case reflects broader financial challenges faced by some Chinese real estate firms. For instance, in July 2023, two creditors of Guangzhou R&F Properties pursued bankruptcy restructuring for that company, citing China’s National Enterprise Bankruptcy Information Disclosure Platform. Xinyuan’s situation highlights creditors’ efforts to recover funds through U.S. legal channels, leveraging the company’s assets in the region.

The bankruptcy filing aims to enable bondholders to recover owed funds while providing Xinyuan a framework to restructure its financial obligations under court supervision. The resolution will hinge on the company’s response and subsequent court decisions, potentially affecting its U.S. operations and asset management.