Kaisa's bonds plunged in December after Shenzhen sales were blocked but had started to recover on prospects of a deal with Sunac. But they gave up some gains on Monday amid concerns as to how much of the funds would go towards repaying international debt.
"The most immediate concern for offshore bondholders is whether Sunac's involvement would be limited to the purchase of these properties," said Dilip Parameswaran, chief executive at Asia Credit Advisors.
"If that is the case, the purchase consideration is likely to be claimed first by onshore lenders, leaving little benefit for offshore lenders."
Kaisa's bonds due 2020, on which the company missed a coupon payment deadline last month, were down 11 points at 61/66 in morning trade from their overnight levels.
At least 28 court filings were made against Kaisa and its subsidiaries between Jan. 6 and Jan. 9 in Shenzhen, where Kaisa has most of its assets, according to records in the city's Intermediate People's Court, involving 17 financial institutions.
The institutions include Bank of China, Citi Bank (China), Bank of Communications, the trust unit of Ping An Insurance, Industrial and Commercial Bank of China, China Merchants Bank and China Cinda Asset Management.
At their lows, Kaisa's bonds had lost as much as two-thirds of their value. Shares halved in a one-month plunge before trading was suspending in December.
Kaisa is in a 30-day grace period after it missed the January 8 due date for a $26 million coupon payment on its bonds. After it missed that payment, Standard & Poor's inflicted a seven-notch downgrade on Kaisa taking it down to SD or selective default.