(Bloomberg) -- A Hong Kong court ordered Times China Holdings Ltd. to return more quickly than it wanted for another hearing on its liquidation petition, as the defaulted developer faced questions over the viability of its restructuring plan.
The builder sought a three-month adjournment, citing details of its debt plan that it released on Nov. 22 that includes upfront payments to creditors and new bonds. But legal representatives for the wind-up petitioner opposed such a delay, raising concerns including how the company will be able to fund the plan.
Judge Linda Chan said the debt proposal was concrete, but whether it is viable depends on if the company has the funding for it. “That is the key,” she said, ordering the parties to return to court on Jan. 27. “No money, no restructuring scheme.”
Times China was under growing pressure to release a workable restructuring plan after being warned by a judge in October that failure to do so would lessen chances for a further delay in liquidation proceedings. With the proposal now in hand, the company must defend it against scrutiny from the court and the petitioner and show that it is feasible.
The company’s legal representative said the developer will use 1.63 billion yuan ($225 million) of cash currently held by onshore subsidiaries to pay expenses such as consent fees and upfront cash payments under the plan. Other funding for the plan would partly come from the pre-sale of 151 onshore developments and disposal of some properties, and potentially all urban renewal projects, in mainland China.
The petitioner’s lawyer questioned how the company intended to use funding from onshore sources to pay offshore debts.
The judge asked the company to provide further information, including proposed funding details and a revised liquidation analysis by Dec. 30.
The liquidation petition against Times China was filed by Hang Seng Bank Ltd. in connection with financial obligations of about $173.2 million and HK$731.4 million ($94 million), respectively, Times China said in a statement in April.
Once the country’s 51st-largest builder by contracted sales, Guangdong-based Times China defaulted nearly two years ago on two dollar bonds and halted offshore debt payments.
It said in an exchange filing on Nov. 22 that it had signed a restructuring support agreement with an ad-hoc group of creditors for the offshore debt plan that also includes new bonds with different tenors, mandatory convertible bonds and company shares.
The lawyer representing the company said the preliminary recovery ratio under the restructuring plan is 28.78%.
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