Amid the deepening real estate crisis in China, embattled property giant China Evergrande Group has filed for Chapter 15 bankruptcy protection in New York.
Chapter 15 allows heavily-indebted company like Evergrande to protect its assets in the US amid its restructuring efforts.
China’s second-largest property developer, with debts estimated to total more than $300 billion, defaulted on its debt repayments in 2021, and has been working to renegotiate agreements with creditors.
While announcing the debt restructuring plan earlier this year, Evergrande said, “The proposed restructuring will alleviate the company’s pressure of offshore indebtedness and facilitate the company’s efforts to resume operations and resolve issues on shore.”
Chapter 15 allows to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants, and other parties of interest involving more than one country. Under chapter 15, a U.S. court may authorize a trustee or other entity to act in a foreign country on behalf of a U.S. bankruptcy estate.
The developer earlier said it had reached binding agreements with its international bondholders on the key terms of the plan, and that it would focus on returning to normal operations in the next three years.
Evergrande also said it would require additional financing of $36.4 billion to $43.7 billion, and that its electric vehicle unit is likely to face shutdown without new funding.
Last week, Dubai-based mobility and green energy company NWTN Inc. announced a strategic investment of $500 million in China Evergrande New Energy Vehicle Group Ltd. in exchange for around 27.50 percent stake.
Evergrande’s website shows its real estate unit has more than 1,300 projects in more than 280 cities in the world’s second largest economy. Its other businesses include an electric car maker, a health care business, a theme park business and a football club.
Amid the issues, Evergrande’s shares were suspended from trading since last year. Last month, reports said the company lost a combined $80 billion of shareholder money over the last two years.
Recently, another Chinese property major Country Garden has warned of a loss of up to $7.6 billion for the first six months of the year, and that it would consider adopting various debt management measures.
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