August 21, 2023: On Thursday, China Evergrande pursues for safety in US court as part of €29.1bn debt overhaul.

In a filing with the Manhattan bankruptcy court, the firm referenced restructuring proceedings in Hong Kong, the Cayman Islands, and the British Virgin Islands.

In a separate statement, Evergrande said it will ask the U.S. court to ” recognize the schemes of arrangement under the offshore debt restructuring for Hong Kong and the British Virgin Islands.”

It added, “The application is a normal procedure for the offshore debt restructuring and does not involve bankruptcy petition.”

The world’s most indebted property developer defaulted in 2021 and announced an offshore debt restructuring program in March. Trading of Evergrande shares is been suspended since March 2022.

Chapter 15 bankruptcy protection allows a U.S. bankruptcy court to intervene in cross-border insolvency cases involving foreign companies undergoing restructuring from creditors. It aims to protect the debtors’ assets and facilitate the rescue of businesses in financial trouble.

According to the filing, Tianji Holdings, an affiliate of Evergrande, and its subsidiary, Scenery Journey, filed for Chapter 15 protection in Manhattan bankruptcy court.

Evergrande’s filing comes amid contagion fears that China’s property sector troubles could spill over to other parts of the economy, which has already seen faltering growth.

Most recently, Country Garden, which used to be one of China’s largest developers, struggled to make coupon payments on U.S. dollar-denominated bonds and issued a profit warning.

According to Reuters, the firm has also suspended trading in at least 10 mainland China-traded yuan bonds.

China’s massive real estate sector has long been a vital growth engine for the world’s second-largest economy, accounting for as much as 30% of the country’s gross domestic product.

Despite recent policy signals, investor worries linger. In late July, its top leaders indicated a shift toward more significant support for the property sector, paving the way for local governments to implement specific policies.