Chinese development giant Evergrande filed for bankruptcy protection in the United States as part of its restructuring initiative.
The heavily indebted firm filed for Chapter 15 bankruptcy this week, Bloomberg reported. The section of bankruptcy law protects the United States assets of non-U.S. companies as they restructure.
An affiliate of the country also filed for the same bankruptcy clause. Evergrande is already in the midst of restructuring proceedings in Hong Kong and on the Cayman Islands.
Evergrande — previously deemed the world’s most indebted developer — has had its liquidity issues spiral out of control in recent years, setting off distress in China’s property sector and concerns about the broader economy.
When it defaulted in December 2021 on an offshore dollar bond, the developer had a whopping $300 billion in liabilities, which has since surged to $340 billion as of the end of last year. The firm recently disclosed that it had lost an unfathomable $81 billion between 2021 and 2022.
Several months ago, Evergrande announced a restructuring plan to help alleviate some of the pressing debt. The developer is still engaged in talks with overseas investors regarding the heap of debt.
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Shares of the company on the Hong Kong stock exchange have been suspended since March and are at risk of being delisted altogether in the near future. Last year also saw the resignations of chief executive officer Xia Haijun and chief financial officer Pan Darong, replaced by Siu Shawn and Qian Cheng, respectively.
As Evergrande fights to restructure, other Chinese developers are also stuck in the mud. Kaisa defaulted after failing to make a repayment on a $400 million bond. This month, Country Garden — the country’s biggest private developer by sales — missed interest payments on two bonds.
— Holden Walter-Warner