China: Real Estate Giant Evergrande Invokes Chapter 15 Of US Bankruptcy Code

China’s Evergrande files Chapter 15 of the US Bankruptcy Code in a New York court. The company has endured difficult years that are well symbolized by the Chinese real estate crisis. According to Evergrande, the company is simply “carrying out a normal offshore debt restructuring process and does not imply filing for bankruptcy.”

Evergrande that plunged the entire Chinese real estate sector into bankruptcy in 2021 and ran up more than $300 billion in debt now uses a section of the US Bankruptcy Code that protects non-US companies undergoing restructuring from creditors who hope to sue or freeze their assets in the United States. At the same time, it called for recognition of the debt restructuring of Hong Kong, the Cayman Islands, and the Virgin Islands.

Just as far from prosperous are the fortunes of China’s largest private developer Country Garden (some interest payments were missed this month) and Zhongzhi Enterprise Group. This investment company, also active in real estate, has not been able to satisfy its creditors.

Therefore, there are fears that the “infection” is already spreading in the system. This fact worries Beijing, which is trying to solve the problems in the economy that is struggling to get back on track and is facing a crisis in demand, both internal and external, and alarming youth unemployment.