China’s Evergrande Group has officially lodged a bankruptcy petition in New York on Thursday. Once China’s second-largest property developer in terms of sales, the company has been grappling with extensive borrowing and debt defaults since 2021, contributing to an ongoing property crisis within the nation.
CNN reports that Evergrande has initiated the filing for Chapter 15 bankruptcy protection. This legal provision empowers a United States bankruptcy court to acknowledge and provide assistance for insolvency or debt restructuring cases involving foreign entities.
The Chapter 15 bankruptcy filing also facilitates the participation of foreign creditors in US bankruptcy proceedings and prohibits any form of bias against them.
A stock exchange filing from the previous month disclosed that Evergrande incurred a loss of $81 billion in shareholder funds combined over the years 2021 and 2022.
Additionally, the filing unveiled that the company’s total debts had surged to 2.437 trillion yuan (equivalent to $340 billion) by the end of the preceding year, roughly equating to two percent of China’s entire gross domestic product.
In March of this year, Evergrande introduced an ambitious multi-billion dollar restructuring strategy designed to repay its international creditors. This extensive debt restructuring initiative aimed to address liabilities surpassing $270 billion and was highlighted as China’s largest endeavor of its kind.
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