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 involvency 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.
Evergrande did not immediately respond to CNN’s request for comment.
The property developer has struggled to pay off its loans, which reached reached 2.437 trillion yuan ($340 billion) by the end of last year — or roughly 2% of China’s entire gross domestic product.
The company also reported in a stock market filing last month that it had lost $81 billion of shareholder money in 2021 and 2022.
Evergrande’s 2021 default set off a larger crisis in China’s property market, damaging homeowners and the broader financial system in the country. 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.
Earlier this year, Evergrande unveiled its long-awaited debt restructung plan, which was China’s largest on record. The company said it had reached “binding agreements” with its international bondholders on the key terms of the plan.
“The proposed restructuring will alleviate the company’s pressure of offshore indebtedness and facilitate the company’s efforts to resume operations and resolve issues on shore,” Evergrande said in a filing announcing the plan.
This is a developing story. Check back for updates.