China’s Evergrande files for bankruptcy
China’s Evergrande Group — once the country’s second-largest property developer — filed for bankruptcy in New York on Thursday.
The beleaguered firm borrowed heavily and defaulted on its debt in 2021, sparking a massive property crisis in China’s economy, which continues to feel the effects.
Evergrande filed for Chapter 15 bankruptcy protection, which allows a US bankruptcy court to step in when an insolvency case involves another country. Chapter 15 bankruptcy is intended to help promote cooperation between US courts, debtors, and other countries’ courts involved in cross-border bankruptcy proceedings.
China’s real estate sector was long seen as a vital growth engine in the world’s second-largest economy and accounted for as much as 30% of the country’s GDP. But Evergrande’s 2021 default sent shockwaves through China’s property markets, damaging homeowners and the broader financial system in the country.
The company’s default came after Beijing began cracking down on excessive borrowing by developers in an attempt to rein in soaring housing prices.
Since Evergrande’s collapse, several other major developers in China, including Kasia, Fantasia, and Shimao Group, have defaulted on their debts. Most recently, another Chinese real estate giant, Country Garden, warned that it would “consider adopting various debt management measures” — fueling speculation that the company may be preparing to restructure its debt as it struggles to raise cash.
The industry’s problems have been amplified by an overall economic slowdown in the country.
China’s Evergrande Group — once the country’s second-largest property developer — filed for bankruptcy in New York on Thursday. The beleaguered firm borrowed heavily and defaulted on its debt in 2021, sparking a massive property crisis in China’s economy, which continues to feel the effects. Evergrande filed for Chapter 15 bankruptcy protection, which allows a US bankruptcy…