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Chinese real estate giant Evergrande is filing for bankruptcy in the United States

Chinese real estate giant Evergrande is filing for bankruptcy in the United States

Evergrande Private Group found itself in difficulty in 2021, with massive debts of over US$300 billion. (photo: 123RF)

NEW YORK (Reuters) – Indebted Chinese real estate giant Evergrande filed for bankruptcy protection in the United States on Thursday, a move to protect its American assets until a settlement agreement is reached and its debt restructuring is found.

The US measure, known as Chapter 15, is intended to provide mechanisms for managing insolvencies involving more than one country.

Evergrande Private Group found itself in trouble in 2021, with massive debts of more than $300 billion (US$1 billion), when Chinese authorities tightened their control over the real estate sector.

Evergrande soon became a symbol of the crisis in China’s private real estate sector, which still faces great difficulty, as builders find themselves unable to complete their projects, and face multiplying legal proceedings and rejection from landlords. .

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

The promoter indicated that he was proposing to his creditors in particular to replace the debt with new bonds and a stake in two subsidiaries, including its ambitious electric car subsidiary.

The difficulties of the former first place in the real estate sector raised fears in 2021 of its collapse and the risk of infection, which makes the second economic power in the world tremble.

According to the latest court documents submitted, the ongoing restructuring proceedings are under way in Hong Kong.

But analyst Yan Yuzhen, director of research at the E-house China Institute, was reassuring in an interview with AFP, believing Evergrande’s approach was “equivalent to looking for a better way to restructure its debt.”

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In fact, Evergrande’s core business is still running. After all, he has a huge responsibility to ensure that deliveries of homes sold are well done.

In July, the Evergrande Group reported a net loss of more than $113 billion (€100 billion) for 2021 and 2022.

The sector’s other giant, Country Garden, is also in difficulty after announcing last week that it was unable to repay two loan installments. China’s leading private real estate developer estimated its debt at the end of 2022 to be €150 billion (US$162 billion). But for Bloomberg, it could reach 176 billion euros ($191 billion).

Beijing recently unveiled measures to revive its vital real estate sector, including providing credit support and cutting red tape.