China’s real estate giant Country Garden’s overseas debt restructuring process has once again hit a roadblock, as key bank members and a special committee are at serious odds over a $178 million compensation payment plan. With the company facing a pressure of $9 billion in debt maturity, the smooth progress of the restructuring agreement becomes crucial.
Country Garden’s overseas debt restructuring faces a new obstacle. Despite the company announcing support from over 70% of dollar bondholders, key bank consortium members such as Bank of China and Industrial and Commercial Bank of China have yet to formally join the restructuring agreement.
The controversy revolves around whether Country Garden should pay the bank consortium $178 million as compensation for releasing $500 million worth of collateral assets. According to the original plan, this compensation payment is to be divided into two parts: half to be paid in cash on the effective date of the restructuring, and the other half to be repaid in the form of a two-year loan.
However, the special committee holding over 30% of the dollar debt strongly opposes this, arguing that the plan may overly deplete the company’s cash flow, impacting the repayment of other creditors; prioritizing the consortium’s repayment rights over other debts; and allegedly transferring the collateral assets originally shared by all creditors to the consortium, lacking transparency.
According to reports by The Paper, the restructuring agreement explicitly states that any compensation payment method must be agreed upon by the special committee, making this clause a key obstacle to advancing the restructuring.
Country Garden’s financial situation is not optimistic. According to the Sina Finance citing the annual report, as of the end of 2024, Country Garden’s total assets were 10.4 trillion yuan, total liabilities were 984.5 billion yuan, with an asset-liability ratio of about 95.1%.
2025 is a crucial year for Country Garden in terms of debt repayment, with approximately $9 billion (65 billion yuan) in debt maturing, mainly including the repayment of medium to short-term overseas dollar bonds and domestic bank loans.
The operating data is equally worrisome. From January to March 2025, Country Garden’s contracted sales of equity amounted to 77.7 billion yuan, a sharp decline of 42.49% year-on-year, reflecting weak market demand. With continued tight cash flow, the company’s debt repayment ability is facing a severe test.
Country Garden’s Chairman Yang Huiyan recently stated a commitment to “sell the pot and iron to deliver houses,” aiming to quickly restore normal operations. This leading real estate company experienced a debt crisis in August 2023, with multiple dollar bond interest payments currently in arrears.
Country Garden’s debt dilemma is not an isolated case. Currently, the overall Chinese real estate industry is still deeply mired in deleveraging and debt restructuring, with several top real estate companies experiencing default events in succession.
On May 26th, Evergrande Group announced that its wholly-owned overseas subsidiary’s $210.2 million dollar bonds due in October were unable to be paid on time, proposing to extend the repayment date to November 23, 2025.
The announcement shows that as of April 30, 2025, the company and its subsidiaries had overdue debts totaling 32.845 billion yuan, with domestic bond principal balance at 4.737 billion yuan, and other interest-bearing debts at 281.08 billion yuan.
Sunac China Holdings also revealed in a disclosure that as of May 23, 2025, the company’s overdue debt principal reached 69.812 billion yuan, including $2.244 billion in overseas bonds and 16.463 billion yuan in domestic bonds.
Moreover, as of the first quarter of 2025, Evergrande’s total liabilities exceeded 2.3 trillion yuan, with no finalization on overseas restructuring; Sunac completed the extension of its dollar bonds but still faces significant repayment pressure; even relatively stable real estate companies like Longfor and Vanke are at risk of credit rating downgrades and tight cash flow.
The progress of Country Garden’s overseas debt restructuring reveals the structural dilemma of Chinese real estate companies in overseas financing: complex coordination mechanisms, conflicting interests that are hard to reconcile, and lack of transparency. If a consensus cannot be reached on the compensation payment plan, the debt restructuring of Country Garden may be further delayed, affecting the overall credit recovery of the company.