Sunac Real Estate: Involved in China Citic Trust Financial Non-performing Debt Dispute Case, Henan Project Company's RMB 1.031 Billion Deposit Frozen and Transferred

Ask AI · How will the court ruling impact Sunac’s 1 billion yuan debt crisis?

On March 18, Sunac China Holdings Limited issued a notice regarding a major lawsuit.

According to the announcement, the plaintiff is Everbright Xinglong Trust Co., Ltd., and the defendants include Henan Chongzhao Enterprise Consulting Management Co., Ltd., Sunac China, Henan Zhongzhixiang Real Estate Co., Ltd., and Henan Youyao Real Estate Co., Ltd.

The case concerns a dispute over the recognition of non-performing financial claims. The first instance judgment was made by the Intermediate People’s Court of Lanzhou City, Gansu Province, in February 2024.

The court’s “Enforcement Ruling” (2026) Gan 01 Enforcement No. 41 shows that the court ordered the freezing and allocation of 1.031 billion yuan in bank deposits of Henan Zhongzhixiang Real Estate Co., Ltd.; Sunac China is jointly liable for this debt; and any shortfall will be covered by seizing, freezing, auctioning, or selling assets of the debtor.

This incident stems from project financing in Henan. Everbright Trust provided financing to Henan Zhongzhixiang Real Estate and others, with Sunac offering joint guarantees. After the project encountered issues, the debt was transferred to non-performing assets, prompting Everbright Trust to initiate judicial recovery.

Data from Qichacha shows that, after equity penetration, Henan Zhongzhixiang Real Estate Co., Ltd. is a subsidiary of Sunac China.

Sunac China stated that the above lawsuit will have a certain adverse impact on the company’s operations and debt repayment ability. The company is actively communicating and negotiating with relevant institutions and creditors, striving to develop and implement solutions, and considering overall debt resolution plans to properly address the issues.

Previously, Sunac China (01918.HK) issued a profit warning, expecting the attributable loss for 2025 to be between 12 billion and 13 billion yuan.

Sunac China said the significant reduction in losses was mainly due to gains from overseas debt restructuring recorded this year. Excluding the impact of debt restructuring gains, the main reasons for the loss include a sharp decline in revenue due to market conditions, pressure on gross profit margins, and additional provisions for asset impairments and contingent liabilities.