July 20, 2024

The Queens County Citizen

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Chinese real estate giant Evergrande has filed for bankruptcy in the United States

Chinese real estate giant Evergrande has filed for bankruptcy in the United States

Private conglomerate Evergrande is in trouble in 2021 with an abysmal debt of more than 300 billion US dollars. (Photo: 123RF)

NEW YORK – Heavily indebted Chinese real estate giant Evergrande filed for bankruptcy protection in the United States on Thursday, a move to protect its US assets until a settlement agreement is reached, court documents show. Its debt restructuring was discovered.

The American system known as “Chapter 15” aims to provide mechanisms to handle bankruptcy cases involving more than one country.

Private conglomerate Evergrande is struggling in 2021 with more than 300 billion US dollars (B$ US) in debt as Chinese authorities tighten their grip on the real estate sector.

Evergrande has become a symbol of the crisis in China’s private real estate sector, which is struggling with builders unable to complete their projects and facing a multiplication of legal processes and refusals from landlords to repay their debt. .

For several months, the group has been working on a plan to restructure its debt and earlier this year made a proposal in this direction.

The promoter has indicated that it is exclusively proposing to its lenders to swap debt for new bonds and stakes in two subsidiaries, including its flagship electric vehicle division.

The former No. 1’s troubles in real estate have raised fears of its collapse in 2021 and contagion risks that could shake the world’s second largest economy.

According to the latest documents submitted, ongoing restructuring processes are underway in Hong Kong.

Analyst Yan Yujin, director of research at the E-House China Institute, however, assured AFP in an interview that he believed Evergrande’s approach was “amount to a search for a better way to restructure its debt”.

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“Of course, Evergrande’s core business is still operating. After all, he has a heavy responsibility to ensure that deliveries of pre-sold houses go well,” he said.

In July, Evergrande Group announced a net loss of more than US$113 billion (100 billion euros) for the years 2021 and 2022.

Another sector giant, Country Garden, also ran into trouble last week when it announced it had defaulted on two loan installments. China’s leading private real estate developer estimates its debt will be around 150 billion euros (US$162 billion) by the end of 2022. But according to the Bloomberg agency, it could reach 176 billion euros (US$191 billion).

Beijing has recently unveiled measures to revive the vital real estate sector, including keeping credit support in place and cutting red tape.

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