Troubled Chinese developer Evergrande has filed for bankruptcy in the US as it attempts to work out an offshore debt restructuring plan for its $468 billion in liabilities.
According to the AFR, Evergrande Group sought Chapter 15 bankruptcy protection in New York in a move that protects its US assets from creditors.
The Chinese home builderโs Chapter 15 petition references restructuring proceedings that are being carried out in Hong Kong and the Cayman Islands.
At the same time, its Scenery Journey unit also filed for Chapter 15 protection, along with affiliate Tianji Holdings.
International debt restructuring deals sometimes require a Chapter 15 filing in the course of finalising a transaction.
Evergrande first defaulted on dollar bonds in December 2021 after months of speculation about the health of the company’s finances, which led to ongoing concerns around the state of Chinaโs property sector.
The company has been struggling for cash since Beijing introduced the โthree red linesโ guidance in 2020, which requires developers to submit detailed reports of their financing.
Chinese developers are now required to have a liability-to-asset ratio of less than 70 per cent, have net gearing ratio of less than 100 per cent; and have cash-to-short-term debt ratio of more than 1x.
In January it was reported that China may ease the โthree red linesโ property rules to support the troubled sector.
Chinaโs property sector has been in a state of turmoil, with major developers failing to complete housing projects, triggering protests and mortgage boycotts from homebuyers.