Hedge fund BFAM Partners and a few other investors have filed a lawsuit in New York against Chinese property developer Glory Health, 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.
Reuters