China Evergrande Group has filed for protection from creditors in a US bankruptcy court as part of its debt restructuring process, amid rising concerns over China’s worsening property crisis and a weakening economy. The Chinese property giant sought protection under Chapter 15 of the US bankruptcy code, which shields the non-US companies that are undergoing restructurings from creditors that hope to sue them or tie up assets in US. The bankruptcy protection filing indicates that the company is nearing the end of its restructuring process after more than one and a half years of negotiations with creditors.
In March, the Evergrande group announced an offshore debt restructuring, expecting it to facilitate a gradual resumption of operations and generation of cash flow. Since then, the developer is gathering and finalising on its creditor support to complete the process. The property developer’s offshore debt restructuring involves a total of $31.7 billion, which include bonds, collaterals and repurchase obligations, according to reports.
Though the filing is procedural in nature, the Evergrande group with more than $300 billion in liabilities has to do it as part of a restructuring process as part of the US law, according to news agency Reuters. In a filing on Friday, Evergrande said that it will ask the US court for recognition of schemes of arrangement under the offshore debt restructuring for China and the British Virgin Islands as its dollar notes are governed by the US law. The company proposed scheduling a Chapter 15 recognition hearing for September 20.
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