In The News

Dan Anderson Discusses the China Evergrande Crisis in The Wall Street Journal and The New York Times

Practices: Capital Solutions & Private Credit, Business Restructuring, Finance, Distressed Asset Sales & Acquisitions, Asia Pacific

In The Wall Street Journal and The New York Times, capital solutions and business restructuring partner Dan Anderson (Hong Kong), provides insights on issues relating to the ongoing China Evergrande crisis.

In the Oct. 22 New York Times article, Dan, who also serves as Ropes & Gray’s Hong Kong office managing partner, outlined that “China Evergrande needs access to funding in order for its business to operate.” If the company can’t find the money to make future payments, it still risks a default. “A default would give holders of those defaulted bonds the right to accelerate,” Dan said, “which could trigger defaults under other bonds and indebtedness.”

In The Wall Street Journal’s Oct. 26 article, Dan explained that Evergrande’s difficulties, and a slowdown in home sales, meant developers could no longer simply raise funds from new bond sales to fix liquidity issues. “It’s very difficult for a Chinese real-estate developer to go to the market these days and say, ‘Please buy my bonds,’” said Dan, also cautioning that more Chinese developers are likely to default and restructure their debts.  

In The New York Times Dec. 9 article, Dan explained “There isn’t a clean, single legal mechanism that can be implemented to restructure the group,” he said. “As a result, it will have to be across jurisdictions, which will make it highly complex.” His comments follow the announcement by Fitch Ratings declaring Evergrande in default after their failure to make a payment.

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