Chinese Evergrande seeks bankruptcy protection in US

Chinese real estate group Evergrande has filed for bankruptcy protection or deferred payment in a court in the United States. The company is burdened with heavy debt and hopes the move will protect its US assets while the group works on restructuring its debts.

Evergrande relies on the U.S. The bankruptcy proceeding is known as Chapter 15. As with Evergrande, the measure is designed to provide mechanisms for managing bankruptcy cases involving more than one country. Tianji Holdings, which is affiliated with Evergrande, filed for Chapter 15 on Thursday. Last year, Beijing-based project developer Modern Land China also made the move.

After years of unprecedented growth, mainly financed with huge loans, the Chinese real estate sector has been in financial trouble for some time now. Evergrande became world news in 2021 as it looked set to collapse and threatened to bankrupt financial markets. The company was in hundreds of crores of debt.

Recently, new issues have come to light in this sector. Earlier this week, investors were shocked after Chinese real estate giant Country Garden failed to make timely interest payments on two bond loans. The ailing group has a few more weeks to meet its debt obligations to avoid being branded a defaulter. A country estate like Evergrande is huge, so if the company collapses, it could have huge economic consequences.