Debt restructuring efforts continue to face challenges as new developments emerge.
"Today, I accept the outcome—win or lose." Four years ago, Wang Wenxue, Chairman of China Fortune Land Development (CFLD), reflected during a company meeting with thousands of employees on several critical misjudgments in recent operations. These included heavy investments in the Beijing-Tianjin-Hebei region and expansions into external areas like the Yangtze River Delta, followed by multiple pandemic shocks.
In 2021, the once-prominent real estate giant—dubbed the "King of Beijing's Surrounding Areas"—defaulted on its debts, entering a new phase of restructuring. Years later, while debt negotiations drag on, another hurdle has surfaced.
Recently, CFLD received a "Notice Letter" from creditor Longcheng Construction and a notification from the Langfang Intermediate People's Court. The creditor applied for the company’s restructuring and initiated a "pre-restructuring" procedure, which the court has now accepted.
Industry experts note that CFLD, already undergoing debt restructuring, faces this pre-restructuring application over an unpaid 4.17 million yuan construction bill—highlighting the awkward reality of "major debts settled, minor debts still exploding." While pre-restructuring provides a unified negotiation platform, uncertainty remains over whether it will lead to formal restructuring.
**A 100-Billion-Yuan Developer Faces Restructuring** On November 17, CFLD’s stock surged by the daily limit, closing at 3.01 yuan per share. The rally followed unusual price movements in the previous two trading sessions, with the stock hitting limit-up on November 13 and 14.
Behind the market volatility lies the possibility of restructuring for this former industry leader. On November 16, CFLD announced receiving the creditor’s application, citing the company’s failure to repay debts and lack of solvency—yet acknowledging its restructuring potential.
Longcheng Construction, a contractor for CFLD’s municipal projects, claimed an outstanding payment of 4.17 million yuan after repeated demands went unmet.
However, the court’s acceptance of pre-restructuring does not guarantee formal proceedings. If restructuring is approved, CFLD’s stock will be flagged for delisting risk. Even then, bankruptcy and liquidation remain possible if restructuring fails.
CFLD’s board pledged cooperation with the court and vowed to advance restructuring plans while maintaining operations.
As one of the first developers to face financial distress, CFLD had proposed a debt restructuring plan covering 219.2 billion yuan in financial liabilities through asset sales, extensions, conversions, and other measures.
By October 2025, about 192.67 billion yuan had been restructured via agreements, while 24.57 billion yuan in overdue debts remained.
**Why Restructuring Now?** Song Hongwei, co-director of Tongce Research Institute, noted that early restructuring terms were more favorable than current market conditions allow, leading to secondary defaults.
Liu Shui, research director at China Index Academy, pointed to persistent challenges: sluggish sales, shrinking asset values, and weak cash flow hinder debt resolution.
Moreover, while major financial debts dominate restructuring talks, operational liabilities like unpaid bills remain unresolved.
Bai Wenxi, deputy chairman of the China Enterprise Capital Alliance, explained that CFLD’s plan focused on large financial debts, leaving smaller creditors to seek legal recourse for priority repayment.
**Coordination with Existing Plans** Precedents exist for large developers undergoing restructuring. In September, Kaisa Group completed its restructuring, becoming the first A-share developer to do so this year.
Song Hongwei emphasized that viable restructuring requires deep debt cuts and equity conversions to restore profitability.
If formal restructuring proceeds, all debts—financial, operational, and employee claims—must be declared, with a draft plan submitted within six months. Existing agreements may be incorporated or adjusted based on creditor votes. Smaller claims could face cash discounts or quick settlements to boost approval odds.
CFLD’s earlier asset-for-debt platforms, like "Happiness Selection" and "Happiness Preferred," might be repurposed as trust interests or equity conversion options.
**Uncertain Road Ahead** Success hinges on asset conditions, sustainable profitability, and creditor support.
Bai Wenxi cautioned that audits must confirm restructuring viability within four months. If solvency gaps are too wide or cash flow insufficient, courts may reject the application. Even approved plans risk failure if creditors oppose adjustments.
Strategic investors are crucial—without binding commitments, restructuring may stall. Small creditors dissatisfied with discounts could also derail the process.
Financially, CFLD reported net losses of 6.03 billion yuan in 2023 and 4.82 billion yuan in 2024, widening to 9.83 billion yuan in the first three quarters of 2025. Total assets shrank 9.8% year-on-year to 274.52 billion yuan, with negative equity of 4.74 billion yuan.
Liu Shui advised other distressed firms to innovate restructuring terms, leverage policy tools, and pivot toward asset-light models like urban renewal to secure long-term viability.
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