Evergrande: Chinese Real Estate Giant Files for Bankruptcy Protection in the United States

Jakarta –

Chinese real estate giant Evergrande, which is the largest property company filed for protection to the bankruptcy court in the United States. Evergrande is a bad example of the property crisis in China.

The company, which President Joko Widodo has alluded to in front of Indonesian developers, seeks protection under Chapter 15 of the US bankruptcy code, which protects non-US companies undergoing restructuring from creditors seeking to sue them or tie up assets in the United States.

Evergrande affiliate Tianji Holdings made the same move last Thursday in Manhattan bankruptcy court.

Quoted from Reuters, Friday (18/8/2023), application for protection from Evergrande comes amid growing fears that problems in China’s property sector could spill over into other sectors of the economy at times as growth slows.

Since the sector’s debt crisis came to light in mid-2021, the company, which accounts for 40% of property sales in China, has been in debt default.

Country Garden, which is also China’s largest private developer, is experiencing the same thing. The company is also worried about investors after it missed several interest payments this month.

Evergrande recently had debt repayments of US$ 330 billion or Rp 4,950 trillion. Previously, it was reported that Evergrande’s debt reached US$ 300 billion. Late 2021 defaults sparked a series of defaults at other builders, leaving thousands of homes idle across China.

In filings in Manhattan bankruptcy court, Evergrande said it was seeking recognition of ongoing restructuring talks in Hong Kong, the Cayman Islands and the British Virgin Islands.

Evergrande said creditors may be able to respond this month regarding the restructuring, with possible approval from Hong Kong and British Virgin Islands courts in the first week of September.

The company proposed scheduling a Chapter 15 confessional hearing for September 20.

Last month, Evergrande posted a combined loss of $81 billion for 2021 and 2022, fueling investor concern about the viability of its proposed debt restructuring plan in March.

On Monday, its electric vehicle unit China Evergrande New Energy Vehicle Group (0708.HK) announced its own proposed restructuring.

The Evergrande NEV’s combined 2021 and 2022 losses are nearly $10 billion.

China Evergrande stock trading was suspended in March 2022.

Regarding Evergrande, some time ago President Jokowi reminded housing developers in Indonesia to be careful when doing business. He doesn’t want what happened to Evegrande to be experienced by other developers, especially in Indonesia. At the 2021 exchange rate, Evergrande’s debt is estimated to reach IDR 4,400 trillion (US$ 300 billion).

“If we know, not all property sectors in other countries can survive because of COVID and the economy. We know that in China there are large property companies that have collapsed whose debts exceed our state budget, up to IDR 4,400 trillion. The debt is IDR 4,400 trillion. Once again, be careful. regarding this, everything must be controlled. How much is our backlog, don’t just build it,” said Jokowi at the Indonesian Real Estate National Conference at the Sheraton Hotel, Gandaria, South Jakarta, Tuesday (9/8/2023).

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2023-08-18 01:50:23
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