(Bloomberg) -- Chinese property giant Country Garden Holdings Co. just got a public nudge that may accelerate its heavy debt restructuring, courtesy of a little-known creditor with a relatively negligible claim.   

A wind-up lawsuit filed against Country Garden in Hong Kong Tuesday by a unit of laminate maker Kingboard Holdings Ltd. is reminiscent of an out-of-nowhere petition that resulted in a liquidation order for an industry peer, China Evergrande Group. 

A Hong Kong bankruptcy feature that allows even a minnow of a creditor to initiate liquidation proceedings — so long as they’re owed at least HK$10,000 ($1,275) — opens a whole bag of complexities for Country Garden, whose languid response time after an October default had frustrated some creditors. 

“Small creditors often have difficulty getting attention,” said Jason Ho, senior managing director and Asia head of FTI Capital Advisors. “And this may be the best way for them to get some responses from the company. Once a wind-up case is filed — no matter how big or small the creditor is — the clock starts to tick.” 

The petition — filed by Kingboard subsidiary Ever Credit Ltd. — would not only drag Country Garden into court but also publicly avail its tussles with creditors over terms of its liabilities, which now total about $190 billion.

The case, coupled with the landmark Evergrande outcome, also reinforces for other Chinese property giants that warding off liquidation threats would require paying closer attention to demands from all pockets of creditors. As the unprecedented property crisis enters its fourth year, only a handful of defaulted developers have managed to overhaul its debt. 

‘Holistic Solution’

Kingboard telegraphed its unit’s petition in October when it issued a statutory demand to Country Garden for repayment of certain sums due on a HK$1.6 billion loan. The statutory demand is often considered a preamble to a wind-up suit. 

Country Garden said in a response to Bloomberg News’ query that the “radical actions” of a single creditor will not have a significant impact on its operations and the restructuring of overseas debts. Its debt that involves Kingboard accounts for a very low proportion of offshore liabilities, the company said.

It could take months, if not years, before the fate of Country Garden is determined. Evergrande’s liquidation order took 19 months and the case was adjourned several times.

Still, Ever Credit’s suit may force Country Garden to release more specifics soon. So far, Country Garden has been vague on restructuring, saying in January only that it is determined for “a holistic solution.” 

A wind-up petition “can pressure debtor companies to come to the table and engage properly with their stakeholders, rather than engaging in unproductive strategies,” said Kathleen Aka, a Hong Kong-based lawyer who leads Asia restructuring practice at Weil, Gotshal & Manges LLP.

The litigation also puts bondholders in a tricky position. Their support is crucial if Country Garden wants to advance a restructuring plan that gets court approval. Some bondholders may want to avoid liquidation if they want to get paid more than what they would get once the company is dissolved. 

“It’s almost for sure that other creditors will stand up and defend Country Garden,” said Oscar Choi, founder and CIO of Oscar and Partners Capital. 

But any delay by the company would embolden some creditors to join Ever Credit. In Evergrande’s case, a creditor group’s decision to later rescind its support for restructuring sped up the court’s order for liquidation.

In a sign that Country Garden’s creditors are ready for further negotiations, an ad-hoc creditor group hired financial and legal advisers in recent months. 

“The game is on,” said Glen Ho, a leader of the restructuring and turnaround practice at Deloitte LLP. “If the company drags its feet, or the proposal is not concrete enough, then the judge will say ‘enough is enough.’”

In a January filing, Country Garden asked for “creditors’ patience.” It’ll get more clarity on the level of their patience on May 17, when Country Garden has its first hearing on the case. 

--With assistance from Pearl Liu.

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