(Yicai) April 24 -- Shares in Jinke Property Group plunged by the exchange-imposed limit today after the troubled Chinese developer’s bankruptcy restructuring filing was accepted by a court in Chongqing. It is the first time that the bankruptcy re-organization by a large developer has been accepted by a Chinese court and makes Jinke the first mainland-listed developer to enter the restructuring process.

Jinke’s share price [SHE: 000656] was trading down 5 percent today at CNY1.14 (USD0.16), the daily limit imposed by the stock exchange on companies at risk of delisting. Trading was halted yesterday due to the exchange’s policy. The bourse issued a delisting warning today before trading resumed.

The Chongqing No. 5 Intermediate People’s Court has declared Jinke unable to settle its debts due to a serious lack of liquidity and accepted its application to begin bankruptcy restructuring, Jinke, which is based in the southwestern municipality, said on April 22. The court acknowledged that even though the developer’s book assets are greater than its liabilities, it is experiencing difficulties in realizing a return on its main assets.

The approval of the application reflects that the local government, regulators, and the court believe that restructuring is feasible, a company source told Yicai.

Jinke, which clocked up sales of CNY223.3 billion (USD30.8 billion) in 2020, applied for bankruptcy restructuring in February, and most creditors were in favor of the move at a court hearing earlier this month.

Jinke, which always prided itself on the policy ‘zero default, no extension,’ defaulted for the first time in late 2022 when it was unable to make interest payments on a USD325 million bond. The bond principal will be due next month.

Jinke had failed to pay the principal on bonds amounting to CNY1.9 billion (USD262.2 million) as of the end of last year. And as of Sept. 30, 2023, it had amassed debts of CNY227.1 billion (USD31.3 billion) of which CNY35.1 billion (USD4.8 billion) was due to be repaid in the next 12 months, according to the company’s 2023 third-quarter financial report.

The developer had assets of CNY260.3 billion (USD35.9 billion) as of Sept. 30, 2023, with a debt-to-asset ratio of 87.24 percent.

Jinke is bracing for losses of between CNY4.8 billion (USD662.4 million) and CNY7.8 billion last year, which could result in net losses of between CNY3.6 billion and CNY6.6 billion after deducting non-recurring profits and losses, according to the earnings forecast released in January. This is an improvement on the CNY21.4 billion (USD2.9 billion) of losses in 2022.

Editors: Tang Shihua, Kim Taylor