(Bloomberg) -- Jinke Properties Group Co. obtained shareholder approval to make a restructuring application with a Chinese court, a step toward becoming the largest developer to do so during the country’s property crisis.

The firm — which has projects in much of the country and focuses on apartments, townhouses and condominiums — is seeking the overhaul to help restore profitability, it said in an exchange filing Thursday. Jinke’s board backed the application proposal last month, following a 2022 disclosure that the company missed payment on a local bond.

Shares of the developer have surged this quarter as it made debt-restructuring progress, climbing 88% to be the best performer in the Shenzhen Stock Exchange’s real estate index. The rally follows what was the gauge’s fifth-largest decline in the previous year through June 30.

A restructuring application by Jinke could be an leading example for China’s onshore credit market, where debt overhauls have been rare. But such proceedings have proliferated in Hong Kong and elsewhere amid a record wave of dollar-bond defaults. In a sweeping 16-point package rolled out by China last November to support the real estate industry, debt restructurings were encouraged. 

Jinke, based in the southwest metropolis of Chongqing, said nearly two months ago that unit of state-owned bad debt manager China Great Wall Asset Management Co. intended to participate in the restructuring as an investor. Early stage efforts in an onshore overhaul usually involve debt claims reporting, asset valuations and negotiations with the help of a court. 

The developer disclosed in May that a construction firm filed a reorganization petition alleging 27.9 million yuan ($3.8 million) of commercial bills weren’t paid. Meanwhile, offshore creditors in March sought help from mainland officials to supervise Jinke’s offshore bond payments.

(Adds details in the second and third paragraphs.)

©2023 Bloomberg L.P.