Hedge fund BFAM, others file lawsuit against Chinese developer for debt repayment

Glory Health Industry

20/04/2023 09:08

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 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, listed in Hong Kong, 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.
    Representatives for Glory Health and BFAM didn't immediately
responded to Reuters request for 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 for 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 borrowings, according to its annual
results filed to the Hong Kong stock exchange this month.
    The company's stock dropped by 8.5% to 18.3 Hong Kong cents
on Thursday. The shares are down 24% so far this year.  
    "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.  
    Established in April 2012, BFAM Partners is a Hong
Kong-based hedge fund manager. It was founded by former Lehman
Brothers trader Benjamin Fuchs. It managed around $3.5 billion
late March 2022, according to the latest regulatory filing.
    ($1 = 6.8905 Chinese yuan renminbi)

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