With the world's biggest debt restructurings،China Evergrande files for US bankruptcy protection

Embattled developer China real estate behemoth Evergrande Group has filed for U.S. Chapter 15 bankruptcy protection in a Manhattan court as part of one of the world's biggest debt restructurings، and it was seeking recognition of restructuring talks currently underway in Hong Kong، the Cayman Islands and the British Virgin Islands، as anxiety grows over China's worsening property crisis and its impact on the weakening economy.

China real estate Giant Evergrande Group، the world’s most indebted developer with liabilities of $340bn، last month unveiled losses of $81bn over 2021 and 2022 as the losses showed that its business model of getting customers to pay for flats before they are built is no longer sustainable.

Evergrande files for US bankruptcy protection

China real estate Giant Evergrande Group bankruptcy filing in a New York court، signed by the company’s foreign representative Jimmy Fong، relies on the so-called Chapter 15 process for foreign companies seeking recognition of their restructuring in the US and the group is expected to hold meetings with creditors in Hong Kong this month over a restructuring plan proposed in March.

China real estate Giant Evergrande Group Evergrande stated that 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 as the company proposed scheduling a Chapter 15 recognition hearing for Sept. 20.

China economic fears mount

China real estate Giant Evergrande Group Evergrande indicated that 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 but the company assured that it is pushing forward its offshore debt restructuring as planned.

Financial times newspaper reported that China real estate Giant Evergrande Group is the world's most heavily indebted property developer and became the poster child for China's property crisis while the company’s filing on last 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.

China real estate Giant Evergrande files for Chapter 15

Since the sector's debt crisis unfolded in mid-2021، companies accounting for 40% of Chinese home sales have defaulted and China real estate Giant Evergrande Group recently had $340 billion of liabilities as the property group’s 2021 bond default triggered sector-wide liquidity crisis with a string of defaults at other builders، resulting in thousands of unfinished homes across China.

China real estate Giant Evergrande Group Evergrande defaulted on its dollar-denominated debts in late 2021، sparking a sector-wide liquidity crisis that has weighed on China’s economic growth and put increasing pressure on policymakers in Beijing so that the property developer China Evergrande has filed for bankruptcy protection in the US، as the company pursues a prolonged restructuring agreement for its overseas liabilities with international creditors that hold billions of dollars in bonds.

One of the world's biggest debt restructurings

After the crisis of China real estate Giant Evergrande Group Evergrande، its fellow developer Country Garden Co.، the largest privately owned homebuilder in China which was until recently seen as safer than many of its highly-levered peers، also missed payments on its international debts this month، and investment group Zhongrong similarly failed to repay savings products.

These incidents renewed fears of a slowdown in the property sector، which typically drives more than a quarter of China’s economic activity and the turmoil threatens to spill over to other areas of the economy، just as Beijing is grappling with deflation، weak exports and soaring youth unemployment.

Chinese authorities tries to shore up confidence in the economy

Chinese authorities have been working to shore up confidence in the economy after disappointing readings on consumer spending while the official gauge of youth unemployment was discontinued on Tuesday، weeks after hitting a record high، while the People’s Bank of China also unexpectedly cut a benchmark interest rate by the biggest margin since the corona virus pandemic.

After the crisis of China real estate Giant Evergrande Group Evergrande، that has more than 1،300 real estate projects in more than 280 cities، its fellow developer Country Garden Co.، Chinese stocks and bonds have fallen this month، with Hong Kong’s Hang Seng index declining more than % 21 from its recent peak to fall into bear market territory on Friday.

China developer Evergrande، the most Debt-ridden

China real estate Giant Evergrande Group، once the country’s second-largest property developer، had about $20bn in international bonds at the time of its default and proposed providing investors with notes linked to the group’s listed subsidiaries in Hong Kongwhile since Evergrande’s collapse، several other major developers in China، including Kasia، Fantasia، and Shimao Group، have defaulted on their debts.

Many real estate Chinese developers have defaulted on their debts since Evergrande’s collapse and Beijing، which launched a deleveraging campaign in 2020 that sought to avoid overheating house prices، has so far stopped short of any major bailout or stimulus and instead sought to complete unfinished projects as homebuyers often purchase apartments prior to their completion while data this week showed new home prices fell in July.

Zhongrong to sue the giant Evergrande

Missed payments from Zhongrong pushed it to sue the giant Evergrande in May 2022 over an investment of Rmb1.9bn ($260mn)، as an annual filing of Evergrande’s corporate bonds showed، part of a so-called trust industry that directs trillions of renminbi into investments across the economy، and has fuelled concern over the shadow finance sector’s exposure to the struggling property sector.

China’s real estate sector was long seen as a vital growth engine in the world’s second-largest economy and accounted for as much as 30% of the country’s GDP، but Evergrande’s 2021 default sent shockwaves through China’s property markets، damaging homeowners and the broader financial system in the country، although the company’s default came after Beijing began cracking down on excessive borrowing by developers in an attempt to rein in soaring housing prices.

Evergrande said in the filing that the proposed restructuring plan will alleviate the company’s pressure of offshore indebtedness and facilitate its efforts to resume operations and resolve issues on shore as well as to focus on returning to normal operations in the next three years، but it would require additional financing of $36.4 billion to $43.7 billion but it also warned that its electric vehicle unit was at risk of shutting down without new funding، so that Dubai-based automobile company NWTN، announced earlier last week، a $500 million strategic investment in Evergrande’s EV group in exchange for a stake of about 28%.