Sincere property Holdings – which CDL has at 51 percent stake in – is the second-largest shareholder of Chongqing Sincere. It is preparing to work with stakeholders and creditors on a restructuring, according to a Bloomberg report.

A Beijing-based creditor of Chongqing Sincere had submitted a bankruptcy petition against Chongqing Sincere. If accepted, a formal process would be triggered, leading to either restructuring or liquidation, or a settlement between creditors and the company.

CDL share dropped to an intraday low of S$6.71, down 4.2 percent or S$0.30. The last time the counter closed near this level was in November 2020. As at the midday trading break, shares of CDL were trading 1.6 per cent or S$0.11 lower at S$6.90.

The group said in a bourse filing on Thursday that it was made aware of the bankruptcy claim filed by Beijing Yi He Mercury Investment Co Ltd against Sincere Property, on July 5.

CDL reiterated that it has ring-fenced its current financial exposure to its investment in Sincere Property and it will not support the continuing financial obligations of Sincere property.

“Despite the bankruptcy proceedings, the group will continue to strenuously protect its position and limit further exposure,” it added.

Citi experts, the news surrounding Sincere Property Group to result in a “Knee – jerk negative reaction” on CLD, its analyst Brandon Lee said in a research note on Thursday.