(Bloomberg) -- A group of offshore creditors to China Evergrande Group is demanding controlling equity stakes of the property developer as well as its two Hong Kong subsidiaries as part of discussions on the firm’s revamped restructuring proposal, according to people with knowledge of the matter.

Their offer is the latest twist before a court hearing on Monday, when the distressed developer faces the risk of a liquidation order unless it submits a convincing restructuring plan. Creditors are requesting their debt be swapped for controlling stakes, the people said, after Evergrande proposed offering 17.8% of the parent and 30% of each of the subsidiaries — Evergrande Property Services Group and China Evergrande New Energy Vehicle Group.

It’s unclear whether Evergrande has responded to the proposal or whether it will mark a step closer to an agreement. Multiple calls to a representative for Evergrande on Friday were unanswered. Houlihan Lokey, a financial adviser to the company, didn’t immediately offer comment when contacted Friday.  

Chairman Hui Ka Yan held a 60% stake in Evergrande as of the end of 2022, according to an annual report. The developer, together with its other subsidiaries, collectively held about 52% in the property management unit and roughly 59% in the energy vehicle unit.

The so-called ad-hoc group of bondholders, which has said it holds more than $6 billion of the builder’s about $19 billion of offshore notes, has held a key role in Evergrande’s restructuring talks. The group at one point endorsed a debt plan released by the developer in March, but its stance since then has evolved amid numerous twists and turns in the drawn-out negotiation. 

Evergrande is at the heart of China’s property crisis that began three years ago with Beijing’s de-leveraging push. Its struggle to determine a viable restructuring plan has seen its winding-up lawsuit drag on for more than a year. At its latest hearing in October, the judge adjourned the proceedings to Dec. 4 and said “this is really the last adjournment.”

Evergrande’s original proposal included an option for some creditors to receive instruments tied to equity of the three firms. Evergrande and its energy vehicle unit and the property service management arm are all penny stocks trading around or below HK$0.50.  

Meanwhile, creditors are already weighing in on whom Evergrande should turn to for professional help if it is ordered to wind down. The bondholder group recommended the court appoint consulting firm Alvarez & Marsal for the job, the people said, while others advocated for competitor Ernst & Young LLP. 

A group of holders who said they hold approximately $2 billion of the offshore notes issued by Scenery Journey Ltd., an Evergrande unit, said in a Friday statement that “any winding up of China Evergrande Group is a distraction” 

The bondholder group is “supportive of the management’s ongoing efforts to maintain Hengda Real Estate as a going concern and to ensure the completion of projects and delivery of homes,” the statement said. Hengda Real Estate Group is a unit of Evergrande. 

--With assistance from Dorothy Ma, Pearl Liu, Wei Zhou and Irene García Pérez.

(Updates with statement from holders’ group in the 9th, 10th paragraphs)

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