by Clare Jim, Jonathan Stempel and Dietrich Knauth
HONG KONG/NEW YORK (Reuters) – Chinese property developer Evergrande filed for bankruptcy proceedings in the United States on Thursday amid growing concerns over China’s deepening housing crisis and the country’s economic slowdown.
Evergrande, once China’s biggest real estate developer, has become a symbol of China’s housing crisis since facing a cash crunch in mid-2021.
With more than 300 billion dollars (275.91 billion euros) in debt, the promoter has placed itself under the protection of “Chapter 15” of the American bankruptcy code, which protects non-American companies undergoing restructuring against to their creditors.
Evergrande declined to comment.
Evergrande’s offshore debt restructuring involves a total of $31.7 billion and includes bonds, guarantees and repurchase obligations. The company will meet with its creditors later this month to discuss its restructuring plan.
The crisis in the real estate sector raises fears of contagion to the rest of the Chinese economy, already weakened by sluggish consumption, the slowdown in industrial activity, rising unemployment and weak external demand.
Country Garden, China’s largest private developer, is seeking a payment extension for one of its foreign-currency bonds, a development that has worried investors so far considering the developer one of the strongest.
Zhongrong International Trust Group announced this week that it would stop paying coupons for its investment products, highlighting the high exposure of China’s shadow banking sector, worth 2.75 trillion euros. to the real estate sector.
The developments come as real estate investment, home sales and new construction have contracted for more than a year in China.
Evergrande announced in March a plan to restructure its offshore debt, which should facilitate the gradual recovery of activities and the generation of cash flows. He is now trying to obtain the support of his creditors to complete the process.
(Reporting by Clare Jim in Hong Kong, Jonathan Stempel and Dietrich Knauth in New York, and Manya Saini in Bangalore, written by Sumeet Chatterjee; Kate Entringer)
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