China’s Evergrande says it is asking U.S. court to approve debt plan

A giant Chinese real estate developer that is struggling to avoid defaulting on $340 billion in debt said Friday it is asking a U.S. court to approve a restructuring plan for foreign bondholders and rejected what it said were news reports that suggest it filed for bankruptcy.

Evergrande Groupe’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.

The request Thursday under Chapter 15 of the U.S. bankruptcy code is “a normal step in the overseas restructuring procedure and doesn’t involve bankruptcy filings,” the company said in a statement issued in Hong Kong. It cited unspecified “media reports” and said it was clarifying the situation.

The company said it negotiated a restructuring with investors in its U.S. 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 City because they are governed by New York state law.

Evergrande ran short of cash after Beijing tightened controls in 2020 on corporate debt that the ruling Communist Party worries is dangerously high. 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.

The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City and founded in 1846.