(Bloomberg) -- A winding-up petition against defaulted developer Country Garden Holdings Co. is highlighting the risks posed by secretive private loans on distressed Chinese property firms. 

The builder, which is at the epicenter of China’s property debt crisis, is facing a petition filed by Ever Credit Ltd. after it failed to repay a term loan facility of about HK$1.6 billion ($204 million), plus accrued interest. The borrowing represents a fraction of Country Garden’s outstanding offshore bonds which total about $10 billion, according to data compiled by Bloomberg.

The development underscores the outsize influence wielded by obscure private lenders and their growing clout after Hong Kong’s courts issued a slew of winding-up orders against distressed real estate firms. The risk in Country Garden’s case is that the move may embolden other disillusioned credit investors to follow suit, especially if restructuring talks drag on or fall apart.

China Evergrande Group, which was once the world’s most indebted developer, received a liquidation order in Hong Kong last month after a petition filed by an individual investor over borrowings worth HK$862.5 million.

Country Garden said it has 135 projects included on local authorities’ “white list” for financing support, and that the winding up petition wouldn’t affect its ability to deliver new homes.

©2024 Bloomberg L.P.