HONG KONG The chairman of defaulted Chinese developer Kaisa Group returned to mainland China from Hong Kong for the first time in almost a decade to get regulatory approval for an offshore debt restructuring, two sources familiar with the matter said.

Chairman Kwok Ying Shing travelled to the southern city of Shenzhen, where Kaisa is based, for talks with officials about two months ago and is still there, one of the industry sources close to the company said.

"It is a critical step for the restructuring," the person said, referring to Kwok meeting regulators as the company faces a liquidation petition in a Hong Kong court on Monday.

"It's a good thing that he's willing to go back and sort things out."

Kwok could not be reached for comment. Kaisa and the Shenzhen government did not respond to requests for comment.

The Kaisa chairman had avoided the mainland since 2015 when the developer became the first Chinese property company to default on its dollar bonds after authorities blocked sales at some of its Shenzhen projects, the two sources said.

Kaisa completed its first debt restructuring in 2016, but defaulted again in late 2021 as China's property sector slipped into a debt crisis, leading many other developers to default.

In 2022 it came under pressure from the Shenzhen government to come up with a plan to repay investors US$2 billion of onshore wealth management products - a sensitive issue to Chinese authorities because many mom-and-pop as well as family members of Chinese officials are investors.

With US$12 billion in offshore debt, Kaisa is China's second-largest issuer among developers after China Evergrande Group, whose billionaire Chairman Hui Ka Yan is under investigation for suspected crimes.

Evergrande was also barred by regulators from issuing new dollar bonds as part of its initial restructuring proposal, before the world's most indebted developer was ordered to liquidate by a Hong Kong court in January.

Kwok returned to Shenzhen to talk to a government committee and onshore regulators about its debt revamp plan as it came close to a deal with bondholders, the two sources said.

A greenlight from Chinese regulators is crucial for a restructuring plan to be implemented.

A third source said Kwok had not been detained and was free to move around in Shenzhen. The sources declined to be named due to the sensitivity of the matter.

The hearing on Kaisa's winding-up petition has been adjourned several times pending progress of the restructuring plan, and it is unclear whether Kaisa will be able to reach a restructuring agreement with bondholders before Monday.

Citicorp International, the trustee of an ad hoc group of bondholders, has been acting as petitioner since March after a former petitioner withdrew.

The developer originally told the Hong Kong court in April that it aimed to iron out the terms by end-May.