China’s Evergrande asks court to approve debt plan and rejects bankruptcy claims
18 August 2023, 12:44
The property developer is said to be struggling with its £267 billion debts.
A giant Chinese real estate developer that is struggling to avoid defaulting on 340-billion-dollar debt (£267 billion) said it is asking a US court to approve a restructuring plan for foreign bondholders and rejected claims that it has filed for bankruptcy.
Evergrande Group’s mountain of debt prompted fears in 2021 of a possible default that might send shockwaves through the global financial system.
China’s government has tried to reassure investors that its problems are contained and that lending markets will be kept functioning.
Thursday’s request under Chapter 15 of the US bankruptcy code is “a normal step in the overseas restructuring procedure and doesn’t involve bankruptcy filings”, the company said in a statement.
It cited unspecified “media reports” and said it was clarifying the situation.
The company said it negotiated a restructuring with investors in its US dollar-denominated bonds under the legal systems of Hong Kong and the British Virgin islands, but needs approval from a bankruptcy court in New York because they are governed by New York state law.
Evergrande ran short of cash after Beijing tightened controls on corporate debt the ruling Communist Party worries is dangerously high in 2020.
Some other developers collapsed, leaving half-finished apartment blocks standing empty.
Evergrande said it had more assets than debt but had trouble turning slow-selling real estate into cash to repay creditors.
