Chinese real estate giant Evergrande files for bankruptcy protection in the U.S.
Evergrande has quickly come to symbolize a crisis in the Chinese real estate sector, with shockwaves being felt in the world's second largest economy
Heavily indebted Chinese real estate giant Evergrande filed for bankruptcy protection in the U.S. on Thursday afternoon, according to court documents, in order to protect assets as it attempts to restructure its debts.
The "Chapter 15" bankruptcy protection was filed, a procedure used to provide legal and financial mechanisms for managing insolvency cases involving more than one country, after Evergrande first came under debt pressures in 2021.
Once China's top developer, the conglomerate has struggled since 2021 with over $300 billion in liabilities, after the Chinese real estate industry came under intense pressure due to increased scrutiny from Beijing’s officials. In July, the Evergrande Group announced a net loss of over $113 billion for the previous two years.
Since then, Evergrande came to symbolize a crisis in the Chinese real estate sector, which found itself in dire straits as developers were unable to finish their projects, coupled with increased legal proceedings, as well as refusals from homebuyers to repay their mortgages, according to AFP.
The difficulties first led to fears of its collapse in 2021, and of possible contagion to the economy in general, with shockwaves being felt throughout China.
On Friday, mere hours after the Evergrande Group filing, the Chinese property sector took another hit when a midsize developer, Soho China, disclosed a 93 percent drop in its profit and outlined a dire outlook on its financial situation.
The first half of the year was "full of uncertainty," its co-CEOs said in the Hong Kong-listed company's Friday filing, according to Nikkei, which impacted Soho's office leasing business, explaining the issue as "many companies have chosen to adopt prudent development strategies and implement stringent cost control measures."