Cover Story: Developers Impose Deeper ‘Haircuts’ on Creditors in Latest Debt Overhauls

"China’s spiraling property slump sends developers down path of radical debt restructuring

As China’s real estate slump drags on with no recovery in sight, distressed developers are shifting toward more aggressive debt restructuring for survival, forcing creditors to swallow deep losses.

The strategy marks a perilous new chapter in the country’s years-long property crisis. Companies are now slashing tens of billions of yuan from their liabilities through restructuring plans that often hinge on creditors accepting severe “haircuts” — or risk getting even less in bankruptcy.

This approach follows a milestone set in January when Sunac China Holdings Ltd. approved a domestic restructuring plan that cut its 15.4 billion yuan ($2.1 billion) debt by more than half. The move established a precedent for other developers, now lining up with similarly radical plans to restructure debt.

That pivot has increased tensions between property companies and their creditors. In late June,