Hedge fund BFAM, DK, others file lawsuit against Chinese developer for debt repayment (updated)

Glory Health Industry

20/04/2023 12:23

(Adds details)
    By Xie Yu
       HONG KONG, April 20 (Reuters) - Hedge fund BFAM Partners
and a few other investors have filed a lawsuit in New York
against Chinese property developer Glory Health  2329.HK ,
seeking $201 million in debt repayment, according to a court
filing seen by Reuters.
    Hong Kong-based BFAM and an investment vehicle of U.S. hedge
fund manager Davidson Kempner, known as DK, together with some
other investors outside of China were collectively owed $141.4
million in principal, $9.4 million in premiums, and $50.4
million in interest, according to the filing dated April 14.
    Glory Health issued offshore bonds worth $334.8 million with
14.25% annual interest in February 2022, and promised to redeem
at least $9.6 million worth of notes that April. 
    Despite an extension to July 2022, Glory Health failed to
make that redemption and those notes were deemed to be in
default after creditors refused the developer a second
extension, the filing said. 
    Glory Health has since failed to pay other interest and meet
partial redemptions, it added.
    Glory Health and BFAM did not responded to a Reuters request
for comment. DK declined to comment.
    The latest lawsuit against a Chinese property developer for
non-payment of debt underscores the challenges international
investors face in recovering their dues from firms reeling under
mounting debts and yet-to-recover sales.
    Glory Health reported 995.3 million yuan ($144.5 million) in
losses last year, and blamed "impact of repeated outbreaks of
the COVID-19 and market sentiment" for its failure to repay the
senior notes and other debt, according to its annual results.
    The company's stock dropped by 8.5% to 18.3 Hong Kong cents
on Thursday. 
    "The bondholders will be exhaustive in their efforts to
vindicate their legal rights," said John Han, a Hong Kong-based 
attorney at law firm Kobre & Kim LLP, representing BFAM and
other investors in the New York court case. 
    The lawsuit has been filed in New York as per the terms of
bonds issued, said Han.
    BFAM was founded by former Lehman Brothers trader Benjamin
Fuchs in 2012. It managed around $3.5 billion as of late March
2022, according to its filing. Davidson Kempner is an asset
manager with $38 billion under management, its website said.
    ($1 = 6.8905 Chinese yuan renminbi)

 (Reporting by Xie Yu; Editing by Sumeet Chatterjee, Kim Coghill
and Chizu Nomiyama)
 ((Yu.Xie@thomsonreuters.com;))