China’s debt-ridden Evergrande seeks creditor protection in US bankruptcy court

Beijing, Aug 18 (EFE).- The heavily debt-ridden Chinese real estate giant, Evergrande, has filed for bankruptcy protection in a United States court, as per media reports on Friday.The beleaguered developer filed its application with the court, indicating its intent to restructure its debt and seek safeguard against creditors under the US bankruptcy law that shields assets of foreign entities from potential seizure.The company cited the US bankruptcy code, which allows overseas companies undergoing restructuring to halt payments temporarily.According to the media reports, Evergrande submitted its petition on Thursday in a New York bankruptcy court, where the Chinese realtor’s subsidiary, Tianji Holdings, operates.Founded in 1996, Evergrande capitalized on China’s urban migration trend but found itself in dire straits after 2020, engaging in months of negotiations with creditors for a restructuring strategy to ensure its survival.Creditors are scheduled for a meeting with the company on Aug.23 and 24 to evaluate and vote on the proposed restructuring plan.Evergrande came under the spotlight due to amassing debts exceeding $300 billion that ended in a liquidity crisis and its default on some offshore bonds.In 2021, it reported net losses of 476.035 billion yuan ($66.4 billion), followed by 105.914 billion yuan ($14.7 billion) in 2022.In 2022, the company generated revenue totaling 230.067 billion yuan ($32 billion), marking an almost 8 percent drop from 2021 and a staggering 55 percent plummet compared to 2020, the year before the full-blown crisis.Trading of Evergrande’s shares on the Hong Kong Stock Exchange remains suspended since March 21, 2022, even though certain subsidiaries have resumed operations.This year, Evergrande said it would need additional financing of up to 300 billion yuan ($42 billion) to ensure the delivery of pre-sold properties, in line with the Chinese government’s wishes.Many Chinese real estate businesses faced a financial crisis after China announced in August 2020 limitations on access to bank funding for developers who, like Evergrande, had acquired a significant debt load by sustaining their expansion for years on aggressive leveraging tactics. EFEaa-ssk