2023-08-18 22:33:43
Real estate giant Evergrande has filed for bankruptcy protection in the United States of America, as the real estate crisis in China worsens.
The heavily indebted company would be allowed to protect its US assets as it tries to strike a multi-billion dollar deal with creditors.
The company defaulted on its huge debts in 2021, which shocked the global financial markets.
The move comes as problems in China’s real estate market add to concerns regarding the world’s second largest economy.
According to the “BBC”, the company filed a protection file under Chapter 15 of the Bankruptcy Law in a New York court last Thursday, and Chapter 15 protects the American assets of any foreign company working to restructure its debts.
It is noteworthy that the company did not respond to the BBC’s request to comment on the matter.
The group’s real estate affairs department owns more than 1,300 projects in more than 280 cities, according to its website, and its other activities include manufacturing electric cars and also owns a football club.
The company is working to renegotiate its agreements with creditors following defaulting on its debts. With total debt estimated at over $300 billion, the company has become the world’s largest indebted real estate developer, and its shares have been suspended since last year.
The company revealed last month that it had lost 581.9 billion yuan (80 billion US dollars) over the past two years.
The real estate giant Country Garden warned last week that it might see a loss of up to $7.6 billion during the first six months of this year.
“The key to this issue is completing unfinished projects because that will keep at least some of the funding flowing,” said Stephen Cochrane of economic research firm Moody’s Analytics.
He added that many homes are already sold, but if construction stops, buyers will not make mortgage payments, adding pressure to developers’ finances.
Earlier this month, Beijing said China’s economy had slipped into recession, with consumer prices falling in July for the first time in more than two years.
The weak growth means that China is not facing the price hikes that have alarmed many other countries and prompted central bankers elsewhere to sharply increase borrowing costs. .
Official figures showed that exports fell 14.5% in July compared to a year ago, while imports fell 12.4%.
Earlier this week, China’s central bank unexpectedly cut key interest rates for the second time in three months in a bid to boost the economy.
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