The logo of Chinese real estate giant Evergrande in Nanjing, in China’s Jiangsu province, on August 18, 2023 (AFP/STRINGER)
The heavily indebted Chinese real estate giant Evergrande on Thursday requested that it be placed in the United States under bankruptcy proceedings, according to court documents, a measure aimed at protecting its American assets, while a deal to restructure its debt be found.
The American procedure known as “Chapter 15” aims to provide mechanisms to manage insolvency cases involving more than one country.
The private conglomerate Evergrande found itself in difficulty in 2021, with an abyssal debt of more than 300 billion dollars, when the Chinese authorities tightened their control over the real estate sector.
Evergrande has quickly become the symbol of the crisis in the private real estate sector in China, which remains in great difficulty, with builders finding themselves unable to complete their projects, and facing the multiplication of legal proceedings and refusals from landlords. to repay their loan.
For several months, the group has been working on a plan to restructure its debt, and made a proposal in this direction earlier this year.
The entrance to China Evergrande’s offices in Hong Kong on July 28, 2022 (AFP/ISAAC LAWRENCE)
The promoter has indicated that it is proposing in particular to its creditors to exchange the debt for new bonds and a stake in two subsidiaries, including its ambitious branch of electric vehicles.
The difficulties of the former number 1 in real estate have raised fears in 2021 of its collapse and risks of contagion, making the world’s second economic power shudder.
According to the latest court documents submitted, the ongoing restructuring proceedings are taking place in Hong Kong.
Analyst Yan Yuejin, director of research at the E-house China Institute, was however reassuring in an interview with AFP, believing that Evergrande’s approach was “equivalent to the search for a better way to restructure its debt”.
“In fact, Evergrande’s core business is still operational. After all, it has a heavy responsibility to ensure that deliveries of pre-sold homes are done properly,” he said.
In July, the Evergrande group announced a net loss of more than 113 billion dollars (100 billion euros) for the years 2021 and 2022.
The logo of Chinese real estate giant Evergrande on a set of residential buildings in Nanjing, China’s Jiangsu province, on August 18, 2023 (AFP/STRINGER)
The other giant of the sector, Country Garden, is also in difficulty after announcing last week that it was unable to repay two loan installments. The first private real estate developer in China estimated its debt at the end of 2022 at some 150 billion euros. But for the Bloomberg agency, it could reach 176 billion euros.
Beijing recently unveiled measures to revive the crucial real estate sector, including putting in place credit support and cutting red tape.