E-House files new Chapter 15 case to gain recognition of updated schemes

By Sarah Lizee

Olympia, Wash., Feb. 14 – E-House (China) Enterprise Holdings Ltd. made a new Chapter 15 filing in the U.S. Bankruptcy Court for the Southern District of New York to gain recognition of its updated schemes of arrangement, according to court documents.

As a reminder, the company filed new petitions in the Cayman Islands and Hong Kong after the restructuring effective date under its 2022 scheme failed to occur by the longstop date and new restructuring terms were later reached.

The company had said in August that it would file a new Chapter 15 petition with respect to the new Cayman proceeding and seek to close the prior case.

Old scheme

The old scheme contemplated the restructuring of the debtor’s $298.2 million of 7 5/8% senior notes due April 18, 2022 and $300 million of 7.6% senior notes due June 10, 2023.

The primary purpose of the scheme was to complete an exchange of the old notes for new dollar-denominated 8% senior unsecured notes due 2025 on substantially the same terms as the old notes and a cash consideration.

In exchange, holders of the old notes would provide releases of all claims relating to the old notes or the restructuring contemplated by the scheme.

Under the terms of the scheme, the restructuring effective date would only occur if the company satisfied certain conditions, including obtaining approval in principle for the listing and quotation of the proposed new notes on the Singapore stock exchange.

In April 2023, the company announced that the debtor, Alibaba.com Hong Kong Ltd., some subsidiary guarantors and the information agent entered into an agreement in relation to an updated restructuring plan, through which Alibaba agreed to support the restructuring of the old notes as well as the debtor’s HK$1.03 billion of 2% convertible notes due Nov. 4, 2023, which would be implemented via schemes of arrangement in the Cayman Islands and Hong Kong.

The debtor, subsidiary guarantors and the information agent also entered into a separate restructuring support agreement inviting each eligible holder of the old notes to submit an electronic consent instruction to support the potential restructuring.

New schemes

In contrast to the prior scheme, the new schemes contemplate an exchange of the old notes and convertible note claims for a combination of cash and new equity in a debtor subsidiary, rather than new notes and cash.

Specifically, the consideration will consist of the following:

• $60 per $1,000 of the scheme creditor claim held by each scheme creditor at the record time;

• For scheme creditors that are noteholders, shares in a special purpose vehicle, issued pro rata by reference to the scheme creditor claim held at the record time, as a proportion of the scheme creditor claims; or

• In the case of Alibaba, share in restructured TM Home issued pro rata by reference to the scheme creditor claim held at the record time, as a proportion of the scheme creditor claims.

The company will, subject to some conditions, pay each acceding scheme creditor an instruction fee in cash in an amount equal to 0.25% of the total principal amount and accrued interest up to but excluding June 30, 2023 of the notes or convertibles, as the case may be, held as of the July 31, 2023 instruction fee deadline.

In order to fund the cash consideration under the restructuring plan, the debtor proposes to issue 2.1 billion shares through a rights issue offered to public shareholders. The estimated net proceeds from this will be about HK$465 million, the company said.

On the new restructuring effective date, as a result of the share issuances, an aggregate 65% equity interest in the share capital of TM Home will be held collectively by the creditor SPV (holding about 54.207%), the Alibaba.com Hong Kong, and Alibaba Investment Ltd., an existing minority shareholder (the latter two together holding about 10.793%).

Shanghai-based E-House mainly offers real estate agency services in the primary market, real estate data and consulting services and real estate brokerage network services.

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