Insolvent since the end of 2021
Real estate giant Evergrande files for bankruptcy protection in the United States
08/18/2023, 08:20 am
With around 300 billion euros, China Evergrande is in debt. No real estate company has more debt. The Chinese group wants to restructure the mountain of debt and is applying for bankruptcy protection in the USA.
China Evergrande has filed for Chapter 15 bankruptcy protection in New York. China Evergrande Group’s filing with a US court seeks approval to restructure the company’s more than $19 billion offshore debt. Chapter 15 bankruptcy is a way for foreign companies with US assets to gain access to domestic courts and protection from US creditors while the company is reorganizing overseas.
China’s second-largest real estate development company earlier this month reported that it cut losses for 2022 thanks to cost-cutting. Evergrande had become insolvent at the end of 2021. Within two years, the company accumulated the equivalent of 72 billion euros in losses and has been struggling with its creditors to reduce its mountain of debt ever since. With 2.4 trillion yuan (equivalent to 300 billion euros), Evergrande is the most indebted real estate company in the world.
Over the past few trading days, investors have worried about Country Garden Holdings, another troubled Chinese real estate developer. Its bonds were downgraded to deteriorating by research firm GimmeCredit on Wednesday.
Heavily indebted Evergrande, which is seen as a symbol of China’s real estate crisis, submitted its application amid growing fears that the sector’s problems could spill over into other parts of the Chinese economy. Since mid-2021, companies that account for 40 percent of China’s home sales have defaulted on payments. This is fueling fears about the resilience of the world’s second largest economy.