China’s Evergrande files for bankruptcy in New York court
Evergrande has become the poster child for China's property crisis
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Chinese real estate behemoth Evergrande on Thursday filed for Chapter 15 bankruptcy protection in a Manhattan court.
In its filing, Evergrande said it was seeking recognition of restructuring talks currently underway in Hong Kong, the Cayman Islands and the British Virgin Islands.
Chapter 15 shields non-U.S. companies that are undergoing restructurings from creditors that hope to sue them or tie up assets in the United States.
The Evergrande Real Estate complex in Yichang, Hubei province, China, July 24, 2023. (Costfoto/NurPhoto via Getty Images / Getty Images)
Evergrande has said creditors may be able to vote this month on a restructuring, with possible approval by Hong Kong and British Virgin Islands courts in the first week of September. The company proposed scheduling a Chapter 15 recognition hearing for Sept. 20.
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Evergrande is the world's most heavily indebted property developer and became the poster child for China's property crisis. The company’s filing on Thursday comes amid growing fears that problems in China's property sector could spread to other parts of the country's economy as growth slows.
FILE: The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. (Reuters / Reuters Photos)
Since the sector's debt crisis unfolded in mid-2021, companies accounting for 40% of Chinese home sales have defaulted.
Evergrande recently had $330 billion of liabilities. A late 2021 default triggered a string of defaults at other builders, resulting in thousands of unfinished homes across China.
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Last month, Evergrande posted a combined $81 billion loss for 2021 and 2022, prompting investor worries about the viability of a debt restructuring plan it proposed in March.
Reuters contributed to this report.