Evergrande, as well as an affiliate Tianji Holdings, filed for Chapter 15

bankruptcy protection in a New York court on Thursday.

Chapter 15 provides mechanisms for dealing with insolvency cases involving more
than one country.

The filing comes amid growing fears that problems in China’s property sector could
spread as growth in the world’s second-biggest economy slows.

Since the sector’s debt crisis unfolded in mid-2021, companies accounting for 40
percent of Chinese home sales have defaulted.

The health of Country Garden, China’s largest privately run developer, is also
worrying investors after the company missed some interest payments this month and
said there were “major uncertainties in the redemption of corporate bonds”.

Evergrande recently had $330bn of liabilities. A late 2021 default triggered a

string of defaults at other builders, resulting in thousands of unfinished homes
across China and raising questions about megaprojects overseas.

Evergrande, founded in 1996 in the southern province of Guangzhou by Hui Ka Yan,

unveiled a proposal for its debt restructuring earlier this year.

The plan offers creditors a choice to swap their debt into new notes issued by the
company and equities in two subsidiaries, Evergrande Property Services Group and
Evergrande New Energy Vehicle Group.

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The latest court documents referenced restructuring proceedings in Hong Kong, the
Cayman Islands and the British Virgin Islands.

Evergrande has said creditors may be able to vote this month on restructuring, with
possible approval by Hong Kong and British Virgin Islands courts in the first week
of September.

In July, Evergrande reported a net loss of more than $113bn in 2021 and 2022.

Housing reform in China during the late 1990s unleashed a property boom.

But amid concern about the potential risks to the financial system and the economy
from the massive debt accrued by the industry’s biggest players, Beijing began to
tighten developers’ access to credit in 2020.

That contributed to a wave of defaults, which undermined the confidence of

potential buyers and reverberated through the industry.

Beijing has recently sought to support the sector by cutting mortgage rates,
slashing red tape and offering more loans to developers.

SOURCE: AL JAZEERA AND NEWS AGENCIES

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