2023-08-18 11:01:51
Two days after the worrying alerts issued by the Country Garden group, another Chinese real estate giant, Evergrande, declared bankruptcy in New York (United States). The property developer, whose inability to meet its deadlines made headlines two years ago, and worried the global economy, filed a case with a US bankruptcy court.
The company filed for protection under Chapter XV of the US Bankruptcy Code, which protects non-US businesses undergoing restructuring from creditors hoping to sue them or tie up assets in the United States.
Former world No. 1 – its website claims more than 1,300 real estate projects in some 280 cities – the most indebted developer in the world, with more than 340 billion dollars (312 billion euros) at the end of 2022, Evergrande wants to protect, to reorganize it, offshore debt of 29.1 billion euros, including bonds, guarantees and repurchase obligations. For several months, the group has been working on a project to restructure its debt and made a proposal in this direction earlier in the year: it notably tried to convince its creditors to exchange the debt against new bonds and a participation in two subsidiaries, including its ambitious electric vehicle arm, EV, in which Dubai-based automaker NWTN on Monday announced a $500 million strategic investment in return for a roughly 28% stake.
Evergrande’s creditors will vote within weeks on its restructuring proposal, which could be approved by courts in Hong Kong and the British Virgin Islands in the first week of September.
Symbol of the real estate private sector crisis
In July, the clay-footed giant announced a net loss of more than 100 billion euros for the years 2021 and 2022.
Once a flagship, Evergrande has quickly become a symbol of the crisis in China’s private real estate sector. The real estate sector still weighs nearly a quarter of the Chinese economy, and the company’s debt 2% of Chinese GDP. The company’s cash crunch came after Beijing began cracking down on excessive borrowing by developers in a bid to rein in soaring property prices. Since the collapse of the group, several other major players in the sector have been defeated on their debt.
#Chinese #giant #Evergrande #files #bankruptcy #United #States