China Evergrande Group sought Chapter 15 bankruptcy protection in New York on Thursday, a move that protects its US assets from creditors while it works on a restructuring deal elsewhere.
The Chinese homebuilder’s Chapter 15 petition references restructuring proceedings being carried out in Hong Kong and the Cayman Islands. 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 finalizing a transaction. Last year, Beijing-based developer Modern Land China Co. also filed for Chapter 15 bankruptcy after filing to repay a $250 million bond and saying it would go forward with an offshore debt restructuring deal.
Evergrande has been working for months to wrap up an offshore debt restructuring plan. Evergrande in April disclosed it didn’t yet have the level of creditor support needed to implement the plan. In July, it received court approval to hold votes on the deal. Meetings are scheduled for later this month.
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Evergrande first defaulted on a dollar bond in December 2021 following months of uncertainty about its finances. The company’s struggles helped set off the initial wave of concerns about China’s property sector that has kept growing.
A bankruptcy lawyer for Evergrande didn’t immediately respond to a request for comment.
The case is China Evergrande Group and Jimmy Fong, 23-11332, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).
--With assistance from Jonathan Randles and Steven Church.
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