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In January, journalists, corporate consultants and restructuring specialists filled up a Hong Kong courtroom in a rare scene to attend Evergrande’s winding-up hearing where judge Linda Chan declared “enough is enough” and handed down a liquidation order.

The landmark case involving China’s once-biggest property developer by sales with more than $300bn in liabilities has put the territory’s legal framework for resolving debt problems back in the spotlight. More than 20 Chinese developers have been slapped with winding-up petitions in Hong Kong since China’s real estate crisis began in 2021, with at least five being ordered to be wound up by a Hong Kong judge.

This is not a great result for any of the parties involved. Often described as a “nuclear option” and a lose-lose scenario by lawyers, these winding-up court proceedings leave creditors with little to no return. And proceedings can drag out for many months.

Lawyers and restructuring specialists say Hong Kong’s legal framework for other debt restructuring options is lacking compared with financial jurisdictions such as London, New York and Singapore.

A restructuring bill to remedy this has been in discussion for more than 20 years in the Asian financial hub but other legislative priorities have taken precedence amid a lack of consensus on what it should contain. The last push to introduce one came in 2020 when a draft legislative proposal was made as the Covid-19 pandemic struck.

The Hong Kong government carried out a consultation but later put the plan again on hold. Although it said it would continue to consult stakeholders to refine the legislative proposals, there does not appear to be a timeframe for that.

Lawyers said there was a pressing need to raise the proposal back up the agenda, particularly as offshore creditors increasingly use Hong Kong courts to force distressed Chinese developers into speeding up their restructuring plans.

Chinese developers have defaulted on a massive $115bn of $175bn in outstanding offshore dollar bonds since 2021, according to Bloomberg data. And property developer Shimao last month became one of the latest to face a winding-up petition, unusually from a Chinese state-backed bank. Country Garden, which defaulted in October, received a winding-up petition in February involving more than $200mn worth of debt.

A key element of a restructuring bill is that after the appointment of a supervisor for a debt restructuring, a statutory moratorium would be imposed to halt parties from rushing off to court and asking for a winding up.

Under the current legal system in Hong Kong, creditors are free to go after distressed companies by filing wind-up petitions before a scheme of arrangement for a restructuring is agreed and then approved by a court, according to Jamie Stranger, a Hong Kong-based partner at Stephenson Harwood.

Law firm Herbert Smith Freehills says this gives “dissenting creditors significant leverage to hold the company and other consenting creditors to ransom and otherwise encourages ‘rogue’ behaviour by them, which in turn jeopardises the restructuring efforts”. It adds: “This often leads to a worse outcome for all interested parties where there is a genuine prospect that the restructured business would be able to trade out of its difficulties.”

One problem is to what extent would a restructuring bill cover mainland Chinese assets. Under the existing winding-up process in Hong Kong, it is very unlikely for offshore creditors to get back any onshore mainland assets. This is despite a “mutual recognition agreement” on insolvency and restructuring rolled out in 2021 that applies in some parts of mainland China. Offshore creditors remain typically subordinated to onshore stakeholders, lawyers say.

A bill “would need to interface with the mainland laws and provide some ability for a provisional supervisor to be recognised and assisted in the mainland”, Jonathan Leitch, a Hong Kong-based partner at Hogan Lovells, told me. Otherwise, the roles of a Hong Kong-based provisional supervisor in most cases “would be severely hampered”.

Lance Jiang, a partner in restructuring and insolvency at law firm Ashurst, says: “Most practitioners would like to have the new restructuring bill, because it definitely mitigates the gap between Hong Kong and other international centres and would give the companies and also the creditors side with more options to do consensual restructuring.”

“It’s Hong Kong, you know, the legislative council can do it quickly, efficiently,” says Jiang, adding that this would benefit everyone in the market.

thomas.chan@ft.com

Pasadena is reeling from a violent car crash over the weekend that left three young adults dead and three other young people badly injured.

The victims, whose ages range from 17 to 22, all had roots in the City of Roses.

A memorial of flowers and candles assembled near a ruined building in east Pasadena marked the spot where the car’s driver crashed his Tesla after hitting a nearby curb at more than 100 mph just before 2:30 a.m. Saturday.

The driver and two passengers died in the crash, and three more passengers were hospitalized with serious injuries, according to authorities.

By Monday morning, the memorial outside the unoccupied building on East Foothill Boulevard was replete with votive candles, a soccer ball and shoe, flowers and a pair of leather notebooks in which friends and family members could leave messages.

It’s where 20-year-old Sergio Nava laid a bouquet of flowers for his friend Stephan Michael “Mike” Pfeiffer, whom he met in middle school at Marshall Fundamental Secondary School in Pasadena. They talked almost every day, and Nava thinks that if the circumstances were different — if maybe Nava hadn’t been scheduled to work Saturday at a local Ralphs supermarket — he could have been in the car with his friend.

“I know he’s in a better place now and he’s looking down on us,” Nava said, placing the flowers.

Pfeiffer, 20, was from Pasadena, according to the Los Angeles County medical examiner’s office. The other two persons killed were a man in his 20s whose name has not been released pending notification to his family, and Moheb Reda Samuel, 22, of Pasadena. The medical examiner’s office previously provided an incorrect spelling for Samuel’s first name.

Samuel was the driver of the white, 5-seat Tesla Model 3 that was heading west on Foothill Boulevard when it appeared to have lost control navigating a bend in the road. It hit a curb and launched into the air, according to Lt. Anthony Russo with the Pasadena Police Department.

The car probably soared more than 130 feet before it collided with a utility pole and the building, Russo said.

The cause of the crash remains under investigation, but based on preliminary information, it does not appear that the vehicle malfunctioned, according to Russo. The county medical examiner’s office will perform a toxicology test to determine if drugs or alcohol were a factor in the crash.

Samuel and the passenger in the front seat died at the scene, while three out of the four rear passengers were thrown from the vehicle during the crash, Russo said. The fourth passenger remained in the vehicle because they were wearing their seat belt.

One of the passengers thrown from the vehicle died, and two others were transported to a hospital along with the survivor who remained in the vehicle’s back seat, Russo said. All three passengers are expected to survive, according to authorities.

Samuel was charged in September with driving under the influence with a blood alcohol level above the legal limit, according to court records. He appeared in a Pasadena courtroom in March for his arraignment and a plea hearing.

Maranatha High School in Pasadena released a statement about the crash because some of the victims involved had been students at the private Christian school. It did not offer any names, but a school athletics website shows that Samuel was a varsity soccer player who graduated from Maranatha in 2020. Grief counselors were being made available to the school and community, according to the statement posted to Facebook on Sunday.

The school asked the public to respect the privacy of the families whose loved ones were involved in the crash.

“We are deeply saddened by this weekend’s tragic car accident that claimed precious young lives. We mourn this immense loss and extend our heartfelt condolences to the families and loved ones of all those affected,” the statement said. “During this difficult time, we turn to our faith in Christ Jesus for comfort and strength and ask others to join us in praying for all who are suffering due to this tragedy.”

On Monday morning, a student wearing a Maranatha sweater approached the memorial and left flowers. Pieces of the Tesla remained strewn about the street and sidewalk.

A large gash in the sidewalk spoke of where the vehicle went airborne, and another large scratch on the ground at a nearby corner showed where the Tesla eventually came to rest.

Among the items at the memorial was a skateboard propped on the handles of the ruined building’s door with the name “Mike” scratched onto the board’s deck.

“He was a humble guy and he didn’t like to show off. He was just very sweet to his grandfather and grandmother,” Nava said. Pfeiffer had taken care of his grandfather until his grandfather’s death, and was living with his grandmother at the time of the accident, according to Nava.

Nava said his friend was a skateboarder who studied kinesiology at Pasadena City College. Pfeiffer had planned to change his major, but remained undecided about what to study next.

“I guess we’ll never know,” Nava said as he picked up one of the notebooks to write a message for his friend. Pfeiffer would have been 21 this July, according to Nava.

A GoFundMe campaign has been started to help pay for Pfeiffer’s funeral services.

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Russian forces have captured three more villages in Ukraine’s north-eastern Kharkiv region, as they press ahead with a new offensive intended to draw Ukrainian forces away from front lines in the east.

Since launching the operation on Friday, Russian troops have occupied about 10 settlements across 100 sq km of territory along Ukraine’s northern border.

Maps compiled by Deepstate, an open-source Ukrainian analysis group, indicated that Russia captured three villages on Sunday, and a battle is under way for control of Hlyboke, a village 40km north of Kharkiv.

The Russian defence ministry said on Monday it had improved its positions in the Kharkiv region and had taken offensive action in four areas — Vovchansk, Neskuchne, Vesele and Lyptsi.

Ukraine’s general staff said Russia was continuing to try to break Ukrainian lines on Monday, that Moscow achieved “partial success” around Lukyantsi and carried out air strikes in and around Vovchansk. It said Kyiv has sent reserves and depending “on how the situation develops, the expansion [of personnel] . . . will continue,” adding that its troops had all the necessary weaponry they needed.

Russia’s operations had previously been focused on the eastern Donetsk region of Ukraine, particularly around the critical stronghold of Chasiv Yar.

But Ukrainian officials believe Russia now wants to draw Ukrainian forces away from the battles in the east, where Kyiv is outgunned and struggling to hold its defensive lines.

Moscow is also looking to exploit its superior resources ahead of the delivery of new military aid to Ukraine from the US, after a hold-up in Congress was resolved and a new aid package passed last month.

Russian forces are advancing much faster in the north than their grinding gains in the east of the country. However, Ukrainian officials and analysts said they had not yet managed a significant breakthrough.

They added that much of the newly occupied area falls within a “grey zone” where neither side previously held positions because its lowland terrain was hard to defend.

Serhiy Kuzan, chair of the Ukrainian Security and Cooperation Center think-tank, said Deepstate’s maps indicated that Russia had not managed to achieve the kind of breakthrough it did a few weeks ago around Ocheretyne, near the city of Avdiivka in Donetsk.

Kuzan added that while Russia did not have enough reserves to take Kharkiv, it had the capacity to continue fighting in the area for at least a month, aiming to get as close to the city as possible and “create pressure there” by shelling it.

A Ukrainian defence forces source told the Financial Times on Monday that Russia would need at least four times as many troops as it currently had for a ground offensive on Kharkiv, and maintained that Moscow’s goal was to stretch Ukraine’s forces.

Analysts have previously estimated that Russia would need to recruit at least 100,000 men if it wanted to take Kharkiv, with the Kremlin reluctant to sign off on another unpopular round of mass mobilisation.

Other than encroaching on Kharkiv, Russia may also be seeking to push Ukrainian forces deeper into the country to get them out of range of the Russian city of Belgorod, just 30km north of the border with Ukraine, which has come under increasing artillery fire in recent months.

The governor of Belgorod region said on Monday that 19 people had been killed as a result of the fighting in the preceding weekend, blaming Ukrainian air and drone strikes.

At least nine people were killed when an explosion blew through part of a 10-storey apartment block on Sunday morning in the centre of the city.

A Ukrainian official confirmed that Ukraine’s SBU internal security services had conducted another drone attack inside Russia, hitting an oil depot in Belgorod and an electricity substation in the Lipetsk region.

“Russian industry, which works for the war against Ukraine, will remain a legitimate target for the SBU. Measures to undermine the enemy’s military potential will continue,” the person said.

On Monday, the Ukrainian army said it had replaced its commander for Kharkiv in an effort to boost its defence of the north-eastern region.

Ukraine’s general staff said there was fighting around settlements in the grey zone south of Pylna and on the outskirts of Vovchansk. It said reserves had been deployed to “stabilise the situation”.

“Our defenders conduct defensive actions [to] inflict damage on the enemy,” it said in a briefing on Monday. “[They are] using unmanned systems for the purpose of conducting reconnaissance and performing pinpoint strikes to achieve maximum losses.”

Vadym Ivaneshchenko, a spokesperson for Ukraine’s 42nd Brigade, which is fighting around Hlyboke, said Russian forces were approaching their positions. He said his unit was “fully equipped”, though more drones and electronic warfare equipment were always needed.

Speaking on Ukraine’s Radio NV, the head of Vovchansk’s local administration, Tamaz Gambarashvili, said it had been “extremely difficult” to build fortifications because the city was often being bombarded by Russian shelling. But Gambarashvili said the construction effort was ongoing.

Cartography and satellite visualisation by Steven Bernard