(Yicai) Sept. 19 -- Sunac China Holdings has become the latest Chinese property developer which has filed for Chapter 15 protection from creditors in the United States to make room for debt restructuring.

Sunac today submitted its application to protect the firm from lawsuits and frozen assets in the US while aiming to restructure its defaulted US dollar bonds, according to public data. The Tianjin-based firm is one of the troubled companies suffering from China's property downturn.

Several Chinese companies have obtained Chapter 15 certifications, including proper firms Kaisa Group and Modern Land, as well as Starbucks rival Luckin Coffee, conglomerate China National Huachen Energy Group, and renewables firm GCL New Energy Holdings, according to incomplete statistics compiled by Yicai.

Since Sunac’s US dollar bonds are governed by the laws of New York, the company needs to secure Chapter 15 recognition to ensure the effectiveness of its offshore debt restructuring in Hong Kong, law insiders said, adding that Chapter 15 is a routine procedure for non-US enterprises' restructuring.

The move should stop overseas creditors from using the New York law to circumvent a reorganization clause ordered by a court in Hong Kong. The certification process will not change any terms of the restructuring plan and the interests of creditors will be fully consistent with the Hong Kong agreement, a lawyer said.

Sunac has received investor support as creditors holding 98.3 percent of the value of the bonds who participated in the vote agreed to its offshore debt restructuring scheme, the company said in a filing with the Hong Kong Stock Exchange yesterday.

Creditors are willing to subscribe to Sunac's convertible notes. The firm will raise the cap of mandatory convertible notes, a type of bond that will be changed to equity in a specific time frame, to USD2.8 billion from USD2.2 billion and cut its liabilities aggregate by up to USD4.5 billion, the firm said in another filing yesterday.

Sunac's Hong Kong-listed shares [HKG: 1918] dropped by 4.3 percent to HKD2.68 (US 34 cents) after almost tripling in value over the past month due to favorable policies, the firm's return to the Hong Kong Stock Connect and hot sales of Beijing projects.

Editor: Emmi Laine