China Property Giant Evergrande Files for US Bankruptcy Protection

    Photo: Wikimedia Commons

    The Facts

    • Property developer China Evergrande Group filed for bankruptcy protection in a Manhattan bankruptcy court on Thursday. In its filing, the company seeks recognition of restructuring talks ongoing in Hong Kong, the Cayman Islands, and the British Virgin Islands.

    • The company — which defaulted on its debts in 2021 — filed for Chapter 15 bankruptcy protection to protect its assets in the US as it works on a multi-billion dollar deal with creditors.

    The Spin

    Narrative A

    Two of China's biggest property developers have filed for bankruptcy protection in the past week, sending a chill through the international real-estate industry. There's no end in sight for the struggling Chinese real-estate sector, and it risks dragging down other sectors as well. It's a deep, structural crisis in property and construction caused by debt and demographic problems that will take years to resolve.

    Narrative B

    Evergrande's bankruptcy filing in the US should be seen as a normal procedure for a company that is trying to protect itself from creditors while finalizing a restructuring deal elsewhere. While China's property debt crisis is deepening, Evergrande Group, one of its most indebted companies, is too big to fail; therefore, its refinancing must be successful.

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